An amortization schedule is a table that details each periodic payment on an amortizing loan. An amortizing loan is a loan where each payment consists of both a portion of the principal amount borrowed and the interest accrued. As payments are made, the principal balance decreases, and consequently, the interest paid in subsequent periods also decreases.
How Amortization Works
The core principle of amortization is that early payments are heavily weighted towards interest, while later payments are more focused on paying down the principal. This is because interest is calculated on the outstanding principal balance. With a declining balance, the interest portion of each fixed payment naturally shrinks over time.
Key Components of an Amortization Schedule
Loan Principal: The initial amount borrowed.
Annual Interest Rate: The yearly rate charged on the loan. This is converted to a monthly rate for calculations.
Loan Term: The total duration of the loan, typically expressed in years, which determines the number of payments.
Monthly Payment: The fixed amount paid each month. This is calculated using a standard loan payment formula.
Payment Number (Month): Indicates the sequence of the payment.
Starting Balance: The loan balance at the beginning of the payment period.
Monthly Payment: The fixed amount paid.
Interest Paid: The portion of the monthly payment that goes towards interest for that period. Calculated as (Starting Balance * Monthly Interest Rate).
Principal Paid: The portion of the monthly payment that reduces the loan's principal. Calculated as (Monthly Payment – Interest Paid).
Ending Balance: The loan balance after the payment is applied. Calculated as (Starting Balance – Principal Paid).
Extra Payments: Optional additional amounts paid towards the principal, which can significantly shorten the loan term and reduce total interest paid.
The Amortization Formula
The standard formula to calculate the fixed monthly payment (M) for an amortizing loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]</code
Where:
P = Principal loan amount
i = Monthly interest rate (Annual Rate / 12)
n = Total number of payments (Loan Term in Years * 12)
Our calculator uses this formula and then generates a detailed schedule showing how each payment is allocated over the life of the loan, including the impact of any extra payments.
Why Use an Amortization Calculator?
An amortization calculator is an invaluable tool for:
Budgeting: Understanding your fixed monthly loan obligations.
Financial Planning: Visualizing how your debt reduces over time.
Comparing Loans: Assessing the total cost of different loan options.
Accelerated Payoff: Determining the impact of making extra payments to pay off your loan faster and save on interest.
Understanding Debt: Gaining clarity on the loan repayment process, especially for mortgages, auto loans, and personal loans.
By inputting your loan details, you can generate a comprehensive schedule that provides a clear roadmap for your debt repayment journey.
function calculateAmortization() {
var principal = parseFloat(document.getElementById("principalAmount").value);
var annualRate = parseFloat(document.getElementById("annualInterestRate").value);
var years = parseInt(document.getElementById("loanTermYears").value);
var extraPayment = parseFloat(document.getElementById("extraPayment").value) || 0;
// Input validation
if (isNaN(principal) || principal <= 0 ||
isNaN(annualRate) || annualRate < 0 ||
isNaN(years) || years 0 and rate > 0
if (principal > 0 && monthlyRate > 0) {
var numerator = monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyRate, numberOfPayments) - 1;
calculatedMonthlyPayment = principal * (numerator / denominator);
} else if (principal > 0 && monthlyRate === 0) {
calculatedMonthlyPayment = principal / numberOfPayments; // Simple division if no interest
} else {
calculatedMonthlyPayment = 0; // Should not happen with validation, but for safety
}
// Add extra payment to the base calculated monthly payment for calculation purposes
var totalPaymentWithExtra = calculatedMonthlyPayment + extraPayment;
var monthCounter = 0;
var remainingBalance = principal;
var totalInterestAccumulated = 0;
var totalPrincipalAccumulated = 0;
while (remainingBalance > 0.01) { // Use a small tolerance for floating point comparisons
monthCounter++;
var interestForThisMonth = remainingBalance * monthlyRate;
var principalForThisMonth;
var paymentThisMonth;
// Determine payment amount for this month
// If this is the last payment, it should only be the remaining balance + interest
if (remainingBalance + interestForThisMonth < totalPaymentWithExtra) {
paymentThisMonth = remainingBalance + interestForThisMonth;
principalForThisMonth = remainingBalance;
interestForThisMonth = paymentThisMonth - principalForThisMonth; // Recalculate interest precisely
remainingBalance = 0;
} else {
principalForThisMonth = totalPaymentWithExtra - interestForThisMonth;
paymentThisMonth = totalPaymentWithExtra;
remainingBalance -= principalForThisMonth;
}
// Ensure ending balance doesn't go negative due to floating point errors
if (remainingBalance < 0) {
// Adjust last payment slightly if it overshoots
var overshoot = -remainingBalance;
paymentThisMonth -= overshoot;
principalForThisMonth -= overshoot;
remainingBalance = 0;
}
totalInterestAccumulated += interestForThisMonth;
totalPrincipalAccumulated += principalForThisMonth;
totalPaymentsMade += paymentThisMonth;
var row = tableBody.insertRow();
var cellMonth = row.insertCell();
var cellStartBalance = row.insertCell();
var cellPayment = row.insertCell();
var cellPrincipal = row.insertCell();
var cellInterest = row.insertCell();
var cellEndBalance = row.insertCell();
cellMonth.textContent = monthCounter;
cellStartBalance.textContent = formatCurrency(principal - totalPrincipalAccumulated + principalForThisMonth); // Balance at start of THIS payment
cellPayment.textContent = formatCurrency(paymentThisMonth);
cellPrincipal.textContent = formatCurrency(principalForThisMonth);
cellInterest.textContent = formatCurrency(interestForThisMonth);
cellEndBalance.textContent = formatCurrency(remainingBalance < 0 ? 0 : remainingBalance); // Ensure no negative balance displayed
// Highlight the final payment row if it's different
if (remainingBalance <= 0.01) {
row.classList.add('final-payment-row');
document.getElementById("finalPayment").textContent = formatCurrency(paymentThisMonth);
}
}
// Update summary results
document.getElementById("totalPayments").textContent = formatCurrency(totalPaymentsMade);
document.getElementById("totalInterestPaid").textContent = formatCurrency(totalInterestAccumulated);
document.getElementById("totalPrincipalPaid").textContent = formatCurrency(totalPrincipalAccumulated); // Should match initial principal
document.getElementById("loanPaidOffIn").textContent = monthCounter + " months";
if(document.getElementById("finalPayment").textContent === "--") {
document.getElementById("finalPayment").textContent = formatCurrency(totalPaymentsMade / monthCounter || 0); // Fallback if no specific final payment found
}
// Update footer totals
document.getElementById("totalPaymentFooter").textContent = formatCurrency(totalPaymentsMade);
document.getElementById("totalPrincipalFooter").textContent = formatCurrency(totalPrincipalAccumulated);
document.getElementById("totalInterestFooter").textContent = formatCurrency(totalInterestAccumulated);
}
function formatCurrency(amount) {
if (isNaN(amount)) return "--";
return amount.toFixed(2);
}
// Initial calculation on load if default values are present
document.addEventListener('DOMContentLoaded', function() {
calculateAmortization();
});