Monthly Payment: $'+pmt.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'
' + 'Total Interest Paid: $'+totalInterest.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'
' + 'Total Cost of Loan: $'+totalPayment.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'
| No. | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| '+i+' | ' + '$'+pmt.toFixed(2)+' | ' + '$'+principalPayment.toFixed(2)+' | ' + '$'+interestPayment.toFixed(2)+' | ' + '$'+Math.abs(balance).toFixed(2)+' |
Calculator Use
The amortization table calculator is a professional tool designed to help borrowers and financial planners visualize the lifecycle of a loan. By entering the principal amount, the annual interest rate, and the duration of the loan, you can generate a complete month-by-month breakdown of every payment.
This calculator is essential for anyone considering a mortgage, auto loan, or personal loan, as it reveals exactly how much of your hard-earned money goes toward the principal balance versus how much is consumed by interest charges.
- Loan Amount
- The total sum of money you are borrowing (the principal).
- Interest Rate
- The annual percentage rate (APR) charged by the lender.
- Loan Term
- The length of time you have to repay the loan, expressed in years and/or months.
How It Works
Amortization is the process of spreading out a loan into a series of fixed periodic payments. Although the total payment remains constant each month, the proportion of principal and interest changes. In the early stages of a loan, interest charges are highest because the remaining balance is at its peak. As the balance decreases, the interest portion of the payment drops, and more of the payment goes toward the principal.
The formula used by this amortization table calculator to determine the monthly payment (PMT) is:
PMT = [P x r x (1+r)^n] / [(1+r)^n – 1]
- P = Principal loan amount
- r = Monthly interest rate (Annual Rate / 12 months)
- n = Total number of months (Years x 12)
Calculation Example
Example: Imagine you take out a $20,000 car loan with a 5% annual interest rate for a term of 5 years (60 months).
Step-by-step solution:
- Monthly Rate (r) = 0.05 / 12 = 0.0041667
- Number of Months (n) = 5 x 12 = 60
- Calculate Payment: [20000 x 0.0041667 x (1.0041667)^60] / [(1.0041667)^60 – 1]
- Resulting Monthly Payment = $377.42
- In Month 1, Interest = $20,000 x 0.0041667 = $83.33. Principal = $377.42 – $83.33 = $294.09.
Common Questions
What is the benefit of an amortization table?
An amortization table allows you to see exactly how much equity you are building in an asset over time. It also highlights how much of your total payment is "wasted" on interest, which can motivate you to make extra principal payments to save money in the long run.
Does the payment amount ever change?
For fixed-rate loans, the total payment amount stays the same. However, if you have an Adjustable-Rate Mortgage (ARM), the interest rate and subsequent monthly payment can change periodically based on market indices. This calculator assumes a fixed interest rate.
How does the term length affect total interest?
Generally, the longer the term, the lower the monthly payment, but the higher the total interest paid over the life of the loan. Conversely, a shorter term requires higher monthly payments but significantly reduces the total interest expense.