Amortization Schedules, Explained
What an amortization schedule is, how each row's interest and principal are calculated, why early payments are mostly interest, and what extra payments save.
By Udit Agarwal · Updated October 17, 2026
An amortization schedule is a table of every payment on a loan that shows how much of each one pays interest, how much reduces the principal, and the balance left afterwards. The payment stays the same, but the split changes every month: interest is charged on the remaining balance, so early payments are mostly interest and later ones mostly principal. Mortgages, car loans, personal loans and many student loans are repaid this way.
To amortize a loan is to repay it in equal installments, each covering that period's interest plus part of the principal, so the balance reaches zero with the last payment. Not all debt works like this. An interest-only loan charges just the interest for a period and leaves the balance where it was, and a credit card has no fixed end date, so the payments you choose decide how long it lasts.
For a fixed-rate loan the payment comes from one formula, M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the amount borrowed, r the monthly rate (the annual rate ÷ 12) and n the number of months. The mortgage guide works through that formula step by step, along with the taxes and insurance a home loan adds. This guide is about what happens once the payment is set.
Every row of a schedule follows the same three steps:
Take a $10,000 loan at 6% for 12 months. The monthly rate is 0.06 ÷ 12 = 0.005, and the formula gives a payment of $860.66. In month 1, interest is 10,000 × 0.005 = $50.00, so $810.66 goes to principal and the balance falls to $9,189.34. In month 2, interest is 9,189.34 × 0.005 = $45.95 and principal is $814.71. Carried through the year:
| Month | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $860.66 | $50.00 | $810.66 | $9,189.34 |
| 2 | $860.66 | $45.95 | $814.71 | $8,374.63 |
| 3 | $860.66 | $41.87 | $818.79 | $7,555.84 |
| 4 | $860.66 | $37.78 | $822.88 | $6,732.96 |
| 5 | $860.66 | $33.66 | $827.00 | $5,905.96 |
| 6 | $860.66 | $29.53 | $831.13 | $5,074.83 |
| 7 | $860.66 | $25.37 | $835.29 | $4,239.54 |
| 8 | $860.66 | $21.20 | $839.46 | $3,400.08 |
| 9 | $860.66 | $17.00 | $843.66 | $2,556.42 |
| 10 | $860.66 | $12.78 | $847.88 | $1,708.54 |
| 11 | $860.66 | $8.54 | $852.12 | $856.42 |
| 12 | $860.70 | $4.28 | $856.42 | $0.00 |
| Total | $10,327.96 | $327.96 | $10,000.00 |
Two patterns show up. Each month the interest falls by the monthly rate times the previous month's principal (0.005 × $810.66 is about $4.05, the drop from $50.00 to $45.95), and the principal rises by the same amount. On unrounded figures, each month's principal is exactly the previous month's multiplied by (1 + r).
This table rounds each figure to the cent, as you would by hand, and the last payment is 4 cents higher to clear the exact remainder. The Amortization Calculator keeps unrounded figures instead, so its balances come out up to 4 cents lower, its last payment stays at $860.66, and it reports total interest of $327.97.
On a one-year loan the effect is mild. On a long loan it dominates, because the balance stays large for years. Here is a $200,000 mortgage at 6% for 30 years, with a payment of $1,199.10:
| Payment | Interest | Principal | Balance after |
|---|---|---|---|
| 1 | $1,000.00 | $199.10 | $199,800.90 |
| 60 (year 5) | $931.88 | $267.22 | $186,108.71 |
| 120 (year 10) | $838.66 | $360.44 | $167,371.45 |
| 180 (year 15) | $712.92 | $486.18 | $142,097.69 |
| 240 (year 20) | $543.31 | $655.79 | $108,007.17 |
| 300 (year 25) | $314.54 | $884.56 | $62,024.17 |
The first payment is 83% interest. Over the first five years you pay about $71,946, and only $13,891.29 of it reduces the balance. Principal does not overtake interest until payment 223, and the loan is not half repaid until payment 252, 21 years in. Over the full term, interest adds up to $231,676.38.
A shorter term or a lower rate shrinks the interest share. On a $25,000 car loan at 7%, the first month's interest is $145.83 whatever the term, but that is 19% of a 36-month payment and 34% of a 72-month payment.
Without extra payments, total interest is the payment times the number of payments, minus the amount borrowed. The term changes it a lot. For the same $25,000 at 7%:
| Term | Monthly payment | Total interest |
|---|---|---|
| 36 months | $771.93 | $2,789.39 |
| 48 months | $598.66 | $3,735.49 |
| 60 months | $495.03 | $4,701.80 |
| 72 months | $426.23 | $5,688.21 |
| 84 months | $377.32 | $6,694.63 |
Totals are worked from the unrounded payment, as the calculator does, so multiplying the rounded payment can be a few cents off. Stretching the loan from 36 to 72 months lowers the payment by $345.70 but more than doubles the interest. The Auto Loan Calculator runs the same numbers starting from a car's price, down payment, trade-in and sales tax.
An extra payment goes straight to principal. The next month's interest is then calculated on a smaller balance, and so is every month's after that. The required payment does not change, so more of each later payment goes to principal and the loan ends early. For the $200,000 loan at 6%:
| Extra each month | Paid off after | Total interest | Interest saved |
|---|---|---|---|
| $0 | 360 months (30 years) | $231,676.38 | $0 |
| $50 | 324 months (27 years) | $203,797.07 | $27,879.31 |
| $100 | 295 months (24 years 7 months) | $182,537.97 | $49,138.41 |
| $200 | 252 months (21 years) | $151,875.87 | $79,800.51 |
An extra $100 a month saves $49,138.41 of interest and ends the loan 65 months early. The final payment is smaller than the others because only the remainder is due. For a single lump sum, such as a bonus, the Mortgage Payoff Calculator accepts a one-time extra payment as well as a monthly one.
Loan terms can affect this. Some mortgages carry a prepayment penalty, usually for paying off the whole loan within the first few years, and the CFPB explains how they work.
Loan statements work in whole cents, so the regular payment is rounded and the last payment absorbs the difference, as in the 12-month table. Some loans also charge interest by the day rather than by the month, so the date a payment arrives moves a little money between the interest and principal columns. A schedule built from the monthly formula is a close estimate of a statement rather than a copy of it. For a mortgage, the schedule covers principal and interest only; property tax, insurance, PMI and HOA dues sit on top of the payment and do not change how the balance falls.
The Amortization Calculator takes a loan amount, an annual interest rate, a term in whole months and an optional extra monthly payment. Type plain numbers, without commas or currency signs; a 30-year loan is 360 months. It shows the scheduled monthly payment, the total interest, the total paid and the payoff time in months, followed by the schedule with the payment, principal, interest and balance for each month. Up to 360 rows appear on the page. Copy CSV copies the full schedule, and Copy summary copies the headline figures.
The extra payment is the same amount every month, starting with the first payment. The calculator models a fixed rate with monthly payments and leaves out fees, escrow and insurance. Everything is calculated in your browser, and nothing you enter is uploaded. The figures are estimates, not financial advice.
What is an amortization schedule? A table listing every payment on a loan, with the interest part, the principal part and the balance remaining after each one. It shows how a fixed payment brings the balance to zero by the end of the term.
How do you calculate the interest part of a loan payment? Multiply the balance at the start of the month by the annual rate divided by 12. At 6% on a $9,189.34 balance, that is 9,189.34 × 0.005 = $45.95, and the rest of the payment reduces the principal.
Why does so much of my payment go to interest at first? Interest is charged on the balance, and the balance is largest at the start. On a $200,000, 30-year loan at 6%, the first payment is 83% interest, and principal does not overtake interest until payment 223.
How is total interest on a loan calculated? Without extra payments, multiply the monthly payment by the number of payments and subtract the amount borrowed. A $10,000 loan at 6% costs about $328 in interest over 12 months, and about $1,600 over 60 months with a payment of $193.33.
Do extra payments lower my monthly payment? Not on a standard schedule. The required payment stays the same and the loan ends sooner, which is how the calculator models it. Some lenders will recalculate the payment after a large prepayment, an arrangement called a recast.
What is negative amortization? It happens when a payment is smaller than the interest due, so the unpaid interest is added to the balance and the debt grows. A standard fixed-rate schedule never does this, because every payment covers at least that month's interest.
Can I export an amortization schedule to a spreadsheet? Yes. Copy CSV copies every row (month, payment, principal, interest and balance) as comma-separated text. Paste it into a spreadsheet and use its split-text-to-columns option, or save it as a .csv file and open that.
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