Amortization Calculator

by
amortization calculator
Monthly (12 per year)Bi-Weekly (Every 2 weeks)Weekly (Every week)Quarterly (4 per year)Annually (1 per year)
Results:
Periodic Payment:
$
Total Interest Paid:
$
Total Principal Paid:
$
Total Cost of Loan:
$
function calculateAmortization(){var P = parseFloat(document.getElementById('principal').value);var annualRate = parseFloat(document.getElementById('interest').value);var years = parseFloat(document.getElementById('years').value);var months = parseFloat(document.getElementById('months').value);var freq = parseInt(document.getElementById('compounding').value);if(isNaN(P)||isNaN(annualRate)||isNaN(years)||isNaN(months)){alert('Please enter valid numeric values.');return;}var r = (annualRate / 100) / freq;var n = (years * freq) + (months * (freq/12));if(r === 0){var pmt = P / n;} else {var pmt = P * (r * Math.pow(1 + r, n)) / (Math.pow(1 + r, n) – 1);}var totalPayment = pmt * n;var totalInterest = totalPayment – P;document.getElementById('periodicPay').innerHTML = pmt.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});document.getElementById('totalInt').innerHTML = totalInterest.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});document.getElementById('totalPrin').innerHTML = P.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});document.getElementById('totalCost').innerHTML = totalPayment.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});var stepsBox = document.getElementById('stepsDisplay');if(document.getElementById('showSteps').checked){stepsBox.style.display = 'block';var summaryHtml = "Loan Breakdown:
";summaryHtml += "Over " + n.toFixed(0) + " payments, you will pay " + ((totalInterest/totalPayment)*100).toFixed(2) + "% in interest.";stepsBox.innerHTML = summaryHtml;} else {stepsBox.style.display = 'none';}document.getElementById('calculatorAnswer').style.display = 'block';}

Using the Amortization Calculator

The amortization calculator is a powerful tool designed to help borrowers understand the long-term costs of a loan. Whether you are looking at a mortgage, an auto loan, or a personal loan, this tool breaks down your periodic payments into interest and principal components. By using this calculator, you can visualize how much of your hard-earned money goes toward paying off the balance versus how much is consumed by interest charges.

To get the most accurate results, ensure you have your loan documents or a quote ready. The calculator handles various payment frequencies, allowing you to see the difference between monthly, bi-weekly, or even annual payment structures.

Loan Amount ($)
This is the total principal balance you are borrowing from the lender.
Annual Interest Rate (%)
The nominal yearly interest rate charged by the bank. Note that this is not the APR, though they are often similar.
Loan Term (Years and Months)
The total duration you have to repay the loan. A standard mortgage is often 30 years, while car loans vary between 3 to 7 years.

How Amortization Works

Amortization is the process of spreading out a loan into a series of fixed payments. At the beginning of the loan term, a large portion of each payment goes toward interest. As the principal balance decreases, the amount of interest charged each period also decreases, meaning a larger portion of your payment goes toward the principal in the later stages of the loan.

The formula used by this amortization calculator to determine the fixed periodic payment (PMT) is:

PMT = P * [ r(1 + r)^n ] / [ (1 + r)^n – 1 ]

  • P = Principal loan amount
  • r = Periodic interest rate (Annual Rate / Number of Payments per Year)
  • n = Total number of payments (Years * Payments per Year)

Calculation Example

Scenario: Imagine you are taking out a $200,000 mortgage with a 5% annual interest rate for a 30-year term, with monthly payments.

Step-by-step solution:

  1. Principal (P) = $200,000
  2. Monthly Interest Rate (r) = 0.05 / 12 = 0.0041667
  3. Number of Payments (n) = 30 * 12 = 360
  4. Calculate PMT: $200,000 * [0.0041667(1.0041667)^360] / [(1.0041667)^360 – 1]
  5. Monthly Payment = $1,073.64
  6. Total Paid over 30 years = $386,511.57
  7. Total Interest = $186,511.57

Common Questions

Does the amortization calculator include taxes and insurance?

No, this specific tool calculates the "Principal and Interest" (P&I) payment. To find your total monthly housing cost, you would need to add property taxes, homeowners insurance, and potentially private mortgage insurance (PMI) or HOA fees.

How can I reduce the total interest paid?

The two most effective ways to reduce interest are securing a lower interest rate or shortening the loan term. For example, a 15-year mortgage usually has a lower interest rate than a 30-year mortgage and results in significantly less interest paid over the life of the loan because the principal is paid down much faster.

What is a negative amortization?

Negative amortization occurs when the periodic payments are not large enough to cover the interest due. The remaining interest is added to the principal balance, causing the loan amount to increase over time rather than decrease. This is rare in standard consumer loans today but can occur in certain specialized financial products.

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