Loan Calculator
Calculate loan payments, total interest, and view a detailed monthly or yearly amortization schedule with optional extra monthly payments.
Amortization Schedule
| Year | Interest Paid | Principal Repaid | Balance Remaining |
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Amortization: How Loan Schedules Work
A Loan Amortization Calculator enables borrowers to gain deep insights into how their loan pays off over time. By calculating the exact split of each monthly payment, you can visualize the impact of compounding interest, the speed at which your equity accumulates, and the benefits of prepayment strategies.
What is the benefit of extra monthly payments?
Adding even a small amount to your standard monthly loan installment can shave years off your loan tenure. Since extra payments act directly on reducing the principal balance, you pay interest on a smaller sum of money next month, leading to compounding savings.
Frequently Asked Questions
An amortization schedule is a complete table of periodic loan payments, showing the amount of principal and interest that comprise each payment until the loan is paid off at the end of its term.
Making extra payments reduces your loan principal directly. Since interest is calculated based on the remaining principal balance, a lower principal balance results in less interest accumulating in future periods, which reduces the overall loan tenure and total interest paid.
In simple interest loans, interest is calculated only on the initial principal borrowed. In amortized loans (like mortgages and auto loans), payments are structured to pay off interest first, with the remainder reducing the principal. The next period interest is calculated based on the new reduced principal balance.