Amortization Calculator: Understand Your Loan Payments Over Time
Financing major purchases—homes, cars, or business assets—usually means taking on a loan. This amortization calculator breaks each payment into principal and interest so you can see exactly where your money goes, month by month.
1) What the Calculator Does
This tool creates a complete amortization schedule. Payments are typically equal each period, but the mix shifts over time: early payments are interest-heavy; later payments reduce more principal. If your loan includes a shorter payment period than the full amortization term, the tool also shows any balloon payment due at the end.
2) Inputs
Enter or adjust the following to model your loan.
| Input | Description |
|---|---|
| Mortgage/Loan Amount | Total principal you plan to borrow. |
| Down Payment | Upfront amount or percentage paid before financing the remainder. |
| Interest Rate (APR) | Annual percentage rate used to compute periodic interest. |
| Amortization Term | Total years over which the loan is amortized. |
| Payment Period | Years until a balloon payment is due (if shorter than the amortization term). |
| Payment Frequency | How often you make payments (e.g., monthly, biweekly) — as supported by the widget. |
| Extra Payments (optional) | Additional principal payments to shorten the term and reduce interest. |
3) How It Works (Formula/Logic)
The standard fixed-payment formula is:
M = P * r * (1 + r)^n / ((1 + r)^n - 1)
P= loan principal after down paymentr= periodic interest rate (e.g., APR/12 for monthly)n= total number of paymentsM= periodic payment (principal + interest)
Each period: interest = balance * r, principal = M - interest, and new balance = balance - principal. If the payment period ends before the amortization term, any remaining balance is shown as the balloon payment.
4) Outputs
After you input your details, the calculator displays the following:
| Output | What It Means |
|---|---|
| Down Payment (Amount) | Exact dollars paid upfront. |
| Monthly Payment Amount | Regular payment due each period (principal + interest). |
| Total Monthly Payments | Number of payments made over the payment period. |
| Total Paid per Year | Annual amount paid — helpful for budgeting and taxes. |
| Balloon Payment | Lump sum owed at the end of the payment period (if the amortization term is longer). |
| Total Amount Paid at End of Term | Grand total paid over the modeled period (including interest). |
| Total Interest Paid | Total borrowing cost across the modeled period. |
5) Practical Use Cases
- Mortgage planning: Compare terms, rates, and down payments to hit a target monthly cost.
- Refinance analysis: See break-even timelines and interest savings.
- Extra-payment strategy: Test lump sums or recurring extra principal.
- Balloon risk check: Understand the lump sum you’ll need at the end of a shorter payment period.
- Budgeting: Map annual outlay and cash-flow needs.
6) FAQ
Does this calculator work for both mortgages and auto loans?
Can I add extra payments?
What’s the difference between amortization and interest-only?
How often should I recalculate?
