Loan Amortization Calculator
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color: #333;
line-height: 1.6;
margin: 0;
padding: 20px;
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margin: 30px auto;
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.input-group input[type="text"]:focus,
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button:hover {
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#result p {
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#amortizationTable {
margin-top: 30px;
width: 100%;
border-collapse: collapse;
overflow-x: auto;
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#amortizationTable th {
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Loan Amortization Calculator
Loan Summary
$0.00
$0.00
$0.00
Amortization Schedule
| Period |
Beginning Balance |
Payment |
Principal Paid |
Interest Paid |
Ending Balance |
Understanding Loan Amortization
Loan amortization is the process of paying off a debt over time through regular, scheduled payments. Each payment is divided into two parts: a portion that covers the interest accrued since the last payment and a portion that reduces the principal loan amount. As time progresses, the interest portion of the payment decreases, while the principal portion increases. This systematic repayment structure ensures that the loan is fully paid off by the end of its term.
How the Amortization Calculation Works
The calculation involves determining the fixed periodic payment amount. This is typically done using the following formula, often referred to as the annuity formula for loan payments:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total periodic payment (principal and interest)P = The principal loan amount (the amount you borrowed)i = Your periodic interest rate (annual rate divided by the number of payments per year)n = The total number of payments over the loan's lifetime (loan term in years multiplied by the number of payments per year)
Once the periodic payment (M) is calculated, the amortization schedule is built. For each period:
- Interest Paid = Beginning Balance *
i
- Principal Paid =
M – Interest Paid
- Ending Balance = Beginning Balance – Principal Paid
- The Ending Balance of the current period becomes the Beginning Balance for the next period.
This process continues until the Ending Balance reaches zero.
Key Components of an Amortization Schedule:
- Loan Principal: The initial amount borrowed.
- Annual Interest Rate: The yearly rate charged on the loan.
- Loan Term: The total duration of the loan (e.g., 15 years, 30 years).
- Payment Frequency: How often payments are made (e.g., monthly, bi-weekly).
- Periodic Payment: The fixed amount paid each period.
- Principal Paid: The portion of each payment that reduces the loan's principal.
- Interest Paid: The portion of each payment that goes towards interest.
- Ending Balance: The remaining loan amount after each payment.
- Total Interest Paid: The sum of all interest payments over the life of the loan.
- Total Amount Paid: The sum of all payments made (Principal + Total Interest).
Why Use a Loan Amortization Calculator?
An amortization calculator is an invaluable tool for borrowers and lenders alike:
- Budgeting and Planning: Helps individuals understand their ongoing financial obligations for loans like mortgages, car loans, or personal loans.
- Comparing Loan Offers: Allows you to compare different loan scenarios, such as varying interest rates or terms, to find the most cost-effective option.
- Understanding Costs: Clearly shows the total interest you'll pay over the life of the loan, highlighting the true cost of borrowing.
- Financial Decision Making: Aids in making informed decisions about taking on new debt or structuring repayment plans.
- Extra Payments: Some calculators can show the impact of making extra payments, demonstrating how they can shorten the loan term and reduce total interest paid.
By understanding the amortization process, you gain better control over your finances and can plan more effectively for your financial future.
function calculateAmortization() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var frequency = parseInt(document.getElementById("paymentFrequency").value);
var resultElement = document.getElementById("result");
var tableBody = document.getElementById("amortizationTable").getElementsByTagName('tbody')[0];
var tableContainer = document.getElementById("amortizationTableContainer");
// Clear previous results and table
resultElement.innerHTML = '
Loan Summary
$0.00$0.00$0.00′;
tableBody.innerHTML = ";
tableContainer.style.display = 'none';
// Input validation
if (isNaN(principal) || principal <= 0 ||
isNaN(annualRate) || annualRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(frequency) || frequency <= 0) {
resultElement.innerHTML = '
Error
Please enter valid positive numbers for all fields.';
return;
}
var monthlyInterestRate = (annualRate / 100) / frequency;
var numberOfPayments = loanTermYears * frequency;
// Calculate monthly payment using the loan payment formula
var monthlyPayment = 0;
if (monthlyInterestRate > 0) {
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// If interest rate is 0, payment is just principal divided by number of payments
monthlyPayment = principal / numberOfPayments;
}
// Display basic results
var totalAmountPaid = monthlyPayment * numberOfPayments;
var totalInterestPaid = totalAmountPaid – principal;
document.getElementById("monthlyPayment").textContent = "$" + monthlyPayment.toFixed(2);
document.getElementById("totalInterestPaid").textContent = "Total Interest Paid: $" + totalInterestPaid.toFixed(2);
document.getElementById("totalAmountPaid").textContent = "Total Amount Paid: $" + totalAmountPaid.toFixed(2);
// Populate amortization table
var currentBalance = principal;
var period = 1;
while (currentBalance > 0.005 && period currentBalance) {
principalPayment = currentBalance;
monthlyPayment = interestPayment + principalPayment; // Recalculate payment for the last period
}
if (interestPayment > currentBalance) { // This can happen if balance is very small
interestPayment = currentBalance;
principalPayment = 0;
monthlyPayment = interestPayment;
}
var endingBalance = currentBalance – principalPayment;
// Ensure ending balance doesn't go negative due to rounding
if (endingBalance < 0) {
endingBalance = 0;
}
var row = tableBody.insertRow();
row.insertCell().textContent = period;
row.insertCell().textContent = formatCurrency(currentBalance);
row.insertCell().textContent = formatCurrency(monthlyPayment);
row.insertCell().textContent = formatCurrency(principalPayment);
row.insertCell().textContent = formatCurrency(interestPayment);
row.insertCell().textContent = formatCurrency(endingBalance);
currentBalance = endingBalance;
period++;
}
tableContainer.style.display = 'block'; // Show the table
}
function formatCurrency(amount) {
return "$" + parseFloat(amount).toFixed(2);
}