Calculate your loan payments and see how principal and interest are paid over time.
Understanding Loan Amortization Schedules
A loan amortization schedule is a table that details each periodic payment on a loan. For each payment, it shows how much of the payment is applied to the interest and how much is applied to the principal balance, as well as the remaining balance after the payment is made. This transparency is crucial for understanding the true cost of borrowing and how your debt is being reduced over time.
How Loan Amortization Works
Loans, such as mortgages, auto loans, or personal loans, are typically repaid in a series of fixed payments over a set period. Each payment consists of two parts:
Principal: The amount borrowed.
Interest: The cost of borrowing the money, calculated as a percentage of the outstanding balance.
In an amortizing loan, the early payments are heavily weighted towards interest. As the principal balance decreases, less interest accrues, and a larger portion of each subsequent payment is applied to the principal. This means you pay down the loan faster in the later stages compared to the early stages.
The Math Behind the Schedule
The calculation of each payment and the breakdown within it involves a few key formulas:
1. Calculating the Periodic Payment (M)
The most common formula for calculating the fixed periodic payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount
i = Periodic interest rate (Annual interest rate / number of payments per year)
n = Total number of payments (Loan term in years * number of payments per year)
2. Calculating Interest and Principal for Each Payment
Principal Paid = Total Periodic Payment (M) – Interest Paid
New Remaining Balance = Old Remaining Balance – Principal Paid
Using This Calculator
Our Loan Amortization Schedule Calculator simplifies these complex calculations for you. Simply enter the following details:
Loan Amount: The total amount you are borrowing.
Annual Interest Rate: The yearly interest rate of the loan (as a percentage).
Loan Term (Years): The total duration of the loan in years.
Payments Per Year: How frequently payments are made (e.g., 12 for monthly, 52 for weekly, 4 for quarterly).
Clicking "Calculate Amortization" will generate a detailed schedule showing each payment, the interest and principal breakdown, and the remaining loan balance. It also provides a summary of total interest paid and total payments made over the life of the loan.
Benefits of an Amortization Schedule
Financial Planning: Understand your long-term debt obligations.
Early Payoff Strategy: See the impact of making extra principal payments.
Loan Comparison: Compare different loan offers more effectively.
Budgeting: Accurately forecast monthly expenses related to your loan.
Understanding your loan's amortization is a key step towards responsible financial management.
function calculateAmortization() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var paymentFrequency = parseInt(document.getElementById("paymentFrequency").value);
var resultDiv = document.getElementById("result");
var scheduleDiv = document.getElementById("schedule");
resultDiv.innerHTML = "";
scheduleDiv.innerHTML = "";
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || isNaN(paymentFrequency) ||
loanAmount <= 0 || annualInterestRate < 0 || loanTermYears <= 0 || paymentFrequency 0) {
monthlyPayment = loanAmount * (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 = loanAmount / numberOfPayments;
}
// Display summary results
var totalInterestPaid = 0;
var totalPaymentsMade = 0;
var remainingBalance = loanAmount;
var scheduleHtml = "
Amortization Schedule
Period
Payment
Principal
Interest
Balance
";
for (var i = 1; i <= numberOfPayments; i++) {
var interestForPeriod = remainingBalance * monthlyInterestRate;
var principalForPeriod = monthlyPayment – interestForPeriod;
// Adjust last payment to ensure balance is exactly 0
if (i === numberOfPayments) {
principalForPeriod = remainingBalance;
monthlyPayment = interestForPeriod + principalForPeriod; // Recalculate monthlyPayment for the last row
}
remainingBalance -= principalForPeriod;
// Ensure balance doesn't go negative due to rounding
if (remainingBalance -0.01) {
remainingBalance = 0;
}
totalInterestPaid += interestForPeriod;
totalPaymentsMade += monthlyPayment;
scheduleHtml += "