Amortization Calculator

Amortization is the systematic repayment of a loan over time through regular payments. Each payment covers both interest due on the loan and a portion that reduces the principal amount owed. As the principal gradually decreases, the interest portion of each payment becomes progressively smaller while the principal portion grows.

An amortization schedule details each periodic payment on an amortizing loan, showing the specific amounts paid toward interest and principal, along with the remaining balance after each payment. This is useful for understanding how much of each payment goes toward building equity versus paying interest.

Amortization is commonly used for mortgages, auto loans, and personal loans. Credit cards and interest-only loans are generally not amortized. Extra payments made during the loan term can significantly reduce total interest costs and shorten the repayment period.