An amortization schedule shows how each payment splits between interest and principal over the life of a loan. Enter the amount, rate and term to generate the schedule and measure the interest saved by extra principal payments.
How it works
Calculate the periodic payment on a fully amortizing loan, build the schedule, and measure the effect of extra principal payments.
Payment = P × r ÷ (1 − (1 + r)^−n)
r = annual rate ÷ payments per year; n = years × payments per year
Interest(t) = Balance(t−1) × r; Principal(t) = Payment − Interest(t)Common uses
- Term loans, equipment financing and notes payable
- Debt service budgeting and covenant planning
- Evaluating prepayment strategies
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Loan amount | $250,000 |
| Annual interest rate | 7.25% |
| Term | 30 years |
| Payment frequency | Monthly |
| Extra principal per payment | $0 |
| First payment month | 2026-12 |
| Payment per period | $1,705.44 |
| Total interest | $363,959 |
| Total of payments | $613,959 |
| Payoff time | 30 years |
| Payoff month | Nov 2056 |
Interpreting the results
- Early payments are mostly interest; extra principal in the first years saves the most interest.
- Bi-weekly schedules here divide the annual rate by 26; a lender’s “bi-weekly program” that halves the monthly payment may differ.
- Export the schedule to CSV for interest-expense accruals and debt footnote roll-forwards.
Frequently asked questions
How is a loan payment calculated?
The payment equals the principal multiplied by the periodic rate, divided by one minus (1 + periodic rate) raised to the negative number of payments. This matches Excel’s PMT function for a fully amortizing loan.
How much do extra principal payments save?
Extra principal reduces the balance on which future interest accrues, so savings compound over the remaining term. On long-term loans, modest recurring extra payments can shorten the term by years and cut total interest substantially.
Why is most of the early payment interest?
Interest is charged on the outstanding balance, which is highest at the start. As principal is repaid, the interest portion falls and the principal portion of each level payment rises.
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