Loan Amortization Calculator
Understanding Loan Amortization
A loan amortization schedule is a table that details each periodic payment on an amortizing loan (like a mortgage or auto loan) over its lifetime. Each payment consists of two parts: principal and interest. Initially, a larger portion of your payment goes towards interest, and a smaller portion goes towards the principal. As the loan matures, this ratio shifts, with more of your payment applied to the principal and less to interest.
Key Components:
- Loan Amount: The initial amount of money borrowed.
- Annual Interest Rate: The yearly rate charged by the lender, expressed as a percentage. This is converted to a monthly rate for calculations.
- Loan Term: The total duration of the loan, typically in years. This is converted to months for calculations.
- Monthly Payment: The fixed amount you pay each month to cover both principal and interest.
- Principal Paid: The portion of each payment that reduces the outstanding loan balance.
- Interest Paid: The portion of each payment that goes towards the interest accrued on the loan.
- Remaining Balance: The amount of principal still owed after each payment.
How the Calculation Works:
The monthly payment (M) is calculated using the following formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- P = Principal loan amount
- i = Monthly interest rate (Annual interest rate / 12)
- n = Total number of payments (Loan term in years * 12)
Once the monthly payment is determined, each payment's allocation to principal and interest is calculated sequentially, updating the remaining balance for the next period.
Example Calculation:
Let's say you take out a loan of $200,000 with an annual interest rate of 5% for a term of 30 years.
- Principal (P): $200,000
- Annual Interest Rate: 5%
- Monthly Interest Rate (i): 5% / 12 = 0.00416667
- Loan Term: 30 years
- Total Number of Payments (n): 30 * 12 = 360
Using the formula, the calculated monthly payment would be approximately $1,073.64.
In the first month, about $833.33 would go towards interest ($200,000 * 0.00416667) and about $240.31 would go towards the principal. The remaining balance would then decrease, and the interest portion of the next payment would be slightly lower.
function calculateAmortization() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("amortizationResult");
// Clear previous results
resultDiv.innerHTML = "";
// Validate inputs
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTerm) || loanAmount <= 0 || annualInterestRate < 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTerm * 12;
// Calculate monthly payment
var monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
// Handle case where interest rate is 0
if (monthlyInterestRate === 0) {
monthlyPayment = loanAmount / numberOfPayments;
}
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
resultDiv.innerHTML = "Calculation error. Please check your inputs.";
return;
}
var amortizationTable = "
| Month | Starting Balance | Payment | Principal Paid | Interest Paid | Ending Balance |
|---|
";
var currentBalance = loanAmount;
var totalInterestPaid = 0;
var totalPrincipalPaid = 0;
for (var month = 1; month <= numberOfPayments; month++) {
var interestPaidThisMonth = currentBalance * monthlyInterestRate;
var principalPaidThisMonth = monthlyPayment – interestPaidThisMonth;
// Adjust last payment to ensure balance reaches exactly zero
if (month === numberOfPayments) {
principalPaidThisMonth = currentBalance;
monthlyPayment = principalPaidThisMonth + interestPaidThisMonth;
}
var endingBalance = currentBalance – principalPaidThisMonth;
// Ensure ending balance doesn't go below zero due to floating point inaccuracies
if (endingBalance < 0.01) {
endingBalance = 0;
}
amortizationTable += "";
amortizationTable += "| " + month + " | ";
amortizationTable += "$" + currentBalance.toFixed(2) + " | ";
amortizationTable += "$" + monthlyPayment.toFixed(2) + " | ";
amortizationTable += "$" + principalPaidThisMonth.toFixed(2) + " | ";
amortizationTable += "$" + interestPaidThisMonth.toFixed(2) + " | ";
amortizationTable += "$" + endingBalance.toFixed(2) + " | ";
amortizationTable += "
";
totalInterestPaid += interestPaidThisMonth;
totalPrincipalPaid += principalPaidThisMonth;
currentBalance = endingBalance;
}
amortizationTable += "
";
resultDiv.innerHTML = "
Amortization Schedule
";
resultDiv.innerHTML += "
Monthly Payment: $" + monthlyPayment.toFixed(2) + "";
resultDiv.innerHTML += "
Total Principal Paid: $" + totalPrincipalPaid.toFixed(2) + "";
resultDiv.innerHTML += "
Total Interest Paid: $" + totalInterestPaid.toFixed(2) + "";
resultDiv.innerHTML += amortizationTable;
}
.calculator-container {
font-family: sans-serif;
max-width: 800px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
box-shadow: 0 2px 4px rgba(0, 0, 0, 0.1);
}
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text-align: center;
margin-bottom: 20px;
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}
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}
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}
.input-group label {
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font-weight: bold;
color: #555;
}
.input-group input[type="number"] {
padding: 10px;
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}
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}
.calculator-inputs button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 20px;
border-top: 1px solid #eee;
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}
.calculator-result h2 {
color: #333;
margin-bottom: 10px;
}
.amortization-table {
width: 100%;
border-collapse: collapse;
margin-top: 15px;
font-size: 14px;
overflow-x: auto; /* Ensure table is scrollable on small screens */
display: block; /* Required for overflow-x */
white-space: nowrap; /* Prevent wrapping of table cells */
}
.amortization-table th,
.amortization-table td {
border: 1px solid #ddd;
padding: 8px;
text-align: right;
}
.amortization-table th {
background-color: #f2f2f2;
color: #333;
font-weight: bold;
text-align: center;
}
.amortization-table tr:nth-child(even) {
background-color: #f9f9f9;
}
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margin-top: 30px;
padding-top: 20px;
border-top: 1px solid #eee;
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line-height: 1.6;
}
.calculator-explanation h3 {
color: #333;
margin-bottom: 10px;
}
.calculator-explanation ul {
margin-left: 20px;
margin-bottom: 10px;
}
.calculator-explanation li {
margin-bottom: 5px;
}