What is an Amortization Calculator?

An amortization calculator is a financial tool that helps you compute and visualize how a loan is repaid over time. It breaks down each payment into principal and interest, showing the gradual reduction of the loan balance with every installment. This is especially useful for fixed-rate loans like mortgages, personal loans, student loans, and auto loans.

How Does Loan Amortization Work?

Amortization involves repaying a loan through equal periodic payments. Each payment includes a portion that goes toward interest and another that reduces the principal. Over time, as the outstanding loan balance decreases, the interest portion of the payment decreases and the principal portion increases.

Formula to Calculate Monthly Amortization

The monthly payment (M) is calculated using the formula:

M = P × (r(1 + r)^n) / ((1 + r)^n - 1)

• P = loan principal (initial loan amount)
• r = monthly interest rate (annual rate / 12)
• n = total number of payments (months)

Amortization Schedule Example

Suppose you borrow $100,000 at a 5% annual interest rate for 15 years. The monthly payment will be approximately $790.79. Initially, a larger portion goes to interest. Over time, more goes toward reducing the principal.

Types of Loans You Can Analyze

• Fixed-rate mortgages
• Car loans and vehicle financing
• Student loans
• Personal and business loans

Advantages of Using Our Amortization Calculator

• Plan your budget with precise monthly payment forecasts
• Understand how much of your payments go to interest vs. principal
• Visualize the impact of extra payments on loan payoff
• Prepare amortization schedules for financial reporting

Comparing With Other Financial Tools

If you’re deciding between different loan options, pair this tool with our Loan Calculator to estimate loan affordability, or explore our ROI Calculator to see how loan costs affect investment returns.

Additional Resources

You can also plan your long-term finances using our Retirement Calculator or forecast savings with our 401k Calculator.

Limitations

• Does not include taxes, insurance, or fees unless entered manually
• Best for fixed-rate loans — not designed for adjustable-rate mortgages (ARMs)

Who Should Use This Calculator?

This tool is ideal for home buyers, car shoppers, financial planners, real estate professionals, and students learning finance. It’s also useful for small businesses planning debt repayment schedules.

Conclusion

Use our Amortization Calculator to simplify loan planning. Whether you're exploring mortgage options or paying off debt early, having an amortization schedule gives you the insights you need to make smarter financial decisions.