Amortization Schedule Calculator

About Amortization Schedule Calculator

Generate a complete amortization schedule. This calculator provides instant results with step-by-step explanations to help you understand the calculation process.

Formula

How to use this calculator

1. Enter the loan amount, interest rate, loan term, and payment frequency.
2. Choose the start date or first payment date if the calculator asks for it.
3. Generate the schedule to see each payment broken into interest and principal.
4. Review the table to track the remaining balance after every payment.

The formula explained

For each payment, the interest part is based on the current balance, then the rest of the payment reduces the principal. Repeating this process for every payment creates the amortization schedule and shows the loan balance going down over time.

• P = the original loan amount, also called the principal
• r = the annual interest rate written as a decimal
• m = the number of payments per year
• i = the periodic interest rate, found by dividing the annual rate by the payment frequency
• B = the remaining loan balance before a payment
• I = the interest part of one payment
• A = the principal part of one payment
• M = the regular payment amount

Step by step method

1. Find the periodic rate with \(i = \frac{r}{m}\).
2. For each payment, compute interest with \(I = B \cdot i\).
3. Find the principal paid with \(A = M - I\), then update the balance with the new balance \(= B - A\).

Worked example

Problem. A borrower takes a \(\$10,000\) loan at \(6\%\) annual interest with monthly payments of \(\$322.06\). Find the first two payments in the amortization schedule.

1. Convert the annual rate to a monthly rate, \(i = \frac{0.06}{12} = 0.005\).
2. First payment, interest is \(10,000 \cdot 0.005 = 50.00\). Principal is \(322.06 - 50.00 = 272.06\). New balance is \(10,000 - 272.06 = 9,727.94\).
3. Second payment, interest is \(9,727.94 \cdot 0.005 = 48.64\) rounded to the nearest cent. Principal is \(322.06 - 48.64 = 273.42\). New balance is \(9,727.94 - 273.42 = 9,454.52\).

Tips and common mistakes

• Early payments usually go mostly toward interest, so the balance drops slowly at first.
• Small rounding differences can appear in a schedule, so the final payment may be slightly adjusted to bring the balance to \(0\).

Frequently asked questions