The yearly rate of interest, expressed as a percentage.
The duration of the loan in years.
Summary
Total Payments: –
Total Interest Paid: –
Monthly Payment: –
Amortization Schedule
Payment #
Payment Amount
Principal Paid
Interest Paid
Remaining Balance
Understanding Amortization Schedules
An amortization schedule is a table that shows the principal and interest breakdown for each payment over the life of a loan. It helps borrowers understand how their payments are allocated and how the loan balance decreases over time. This calculator helps you generate such a schedule.
The Math Behind Amortization
The core of an amortization calculation involves determining the fixed periodic payment (usually monthly) and then allocating each payment between interest and principal.
1. Calculating the Monthly Payment (M)
The formula for calculating the fixed monthly payment for an amortizing loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]</cod
Where:
M = Monthly Payment
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
2. Generating the Schedule
For each payment period (month):
Calculate Interest Paid: The interest for the current period is calculated on the outstanding balance from the previous period.
Interest Paid = Remaining Balance * i
Calculate Principal Paid: The portion of the monthly payment that goes towards reducing the principal.
Principal Paid = Monthly Payment (M) - Interest Paid
Calculate New Remaining Balance: Subtract the principal paid from the previous remaining balance.
Remaining Balance = Previous Remaining Balance - Principal Paid
This process repeats for every payment until the remaining balance reaches zero.
Use Cases for an Amortization Calculator:
Mortgage Planning: Understand your monthly payments, total interest costs, and how quickly you can pay off your home loan.
Auto Loans: See how your car payments are structured and the total interest paid over the loan term.
Personal Loans: Plan for repayment of unsecured loans and manage your budget effectively.
Debt Consolidation: Analyze the terms of a new consolidated loan to ensure it's beneficial.
Financial Education: Learn the mechanics of how loans are repaid, which is crucial for informed financial decisions.
By using this calculator, you gain a clear picture of your loan's repayment journey, empowering you to make smarter financial choices.
function calculateAmortization() {
var principalAmount = parseFloat(document.getElementById("principalAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var errorMessages = [];
if (isNaN(principalAmount) || principalAmount <= 0) {
errorMessages.push("Please enter a valid Principal Amount greater than zero.");
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
errorMessages.push("Please enter a valid Annual Interest Rate (cannot be negative).");
}
if (isNaN(loanTermYears) || loanTermYears 0) {
alert("Input Errors:\n" + errorMessages.join("\n"));
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
var totalInterestPaid = 0;
var totalPayments = 0;
var monthlyPayment = 0;
if (monthlyInterestRate > 0) {
monthlyPayment = principalAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) - 1);
} else {
monthlyPayment = principalAmount / numberOfPayments; // Simple division if interest is 0
}
monthlyPayment = monthlyPayment.toFixed(2);
var amortizationTableBody = document.getElementById("amortizationTableBody");
amortizationTableBody.innerHTML = ''; // Clear previous table data
var remainingBalance = principalAmount;
var paymentCounter = 1;
while (remainingBalance > 0.005) { // Use a small tolerance for floating point precision
var interestPaid = remainingBalance * monthlyInterestRate;
var principalPaid = monthlyPayment - interestPaid;
// Adjust last payment to ensure balance is exactly zero
if (paymentCounter === numberOfPayments || principalPaid > remainingBalance) {
principalPaid = remainingBalance;
// If there's a slight discrepancy due to rounding, adjust monthlyPayment for the last one
monthlyPayment = (parseFloat(monthlyPayment) - (remainingBalance - principalPaid)).toFixed(2);
if (monthlyPayment < 0) monthlyPayment = 0; // Ensure not negative
interestPaid = monthlyPayment - principalPaid; // Recalculate interest for last payment
}
remainingBalance -= principalPaid;
if (remainingBalance < 0) {
remainingBalance = 0;
}
totalInterestPaid += interestPaid;
totalPayments += parseFloat(monthlyPayment);
var row = amortizationTableBody.insertRow();
row.insertCell(0).innerHTML = paymentCounter;
row.insertCell(1).innerHTML = '$' + parseFloat(monthlyPayment).toFixed(2);
row.insertCell(2).innerHTML = '$' + principalPaid.toFixed(2);
row.insertCell(3).innerHTML = '$' + interestPaid.toFixed(2);
row.insertCell(4).innerHTML = '$' + remainingBalance.toFixed(2);
paymentCounter++;
}
document.getElementById("totalPayments").innerHTML = "Total Payments: $" + totalPayments.toFixed(2) + "";
document.getElementById("totalInterestPaid").innerHTML = "Total Interest Paid: $" + totalInterestPaid.toFixed(2) + "";
document.getElementById("monthlyPayment").innerHTML = "Monthly Payment: $" + monthlyPayment + "";
document.getElementById("amortizationTableContainer").style.display = 'block';
}