Results are estimates for reference only and may differ from the actual amount.
How to use
- Enter the loan amount, the annual interest rate and the term in years or months.
- Choose a repayment method. Most personal and auto loans use equal payments. Add an interest-only period if the loan starts with one.
- Read the monthly payment, total interest and total amount paid. Switch methods to compare the cost.
- Review the payment schedule and download it as a CSV file to open in Excel or Google Sheets.
How amortization works
An amortizing loan is repaid in regular installments that cover both interest and principal. Each month, interest is charged on the balance that is still outstanding. Early in the loan the balance is high, so most of each payment goes to interest. As the balance falls, the interest portion shrinks and more of the same payment goes toward principal. The schedule table shows this shift month by month.
Three repayment methods
- Equal payments. The standard for mortgages, auto loans and personal loans. The payment is fixed for the whole term.
- Equal principal. The principal is split evenly across the term, and interest is added on top. Payments decline every month, and the total interest is lower than with equal payments.
- Interest-only with a balloon payment. You pay only interest each month and repay the full principal at the end. Monthly costs are lowest, but total interest is highest because the balance never falls.
Worked example
Borrow $25,000 at 7.5% for 5 years with equal payments. The monthly rate is 0.625%, and the payment comes to about $500.95. The first month’s interest is $156.25, so $344.70 goes toward principal. Over 60 months you pay roughly $5,057 in interest. With equal principal, the first payment is $572.91, falling to about $420 by the end, and total interest drops to about $4,766.
Rounding and interest methods
Amounts are rounded to the nearest cent. Interest is charged as one twelfth of the annual rate on the remaining balance by default, which matches how most US installment loans and mortgages are calculated. The advanced options let you switch to actual-day interest, where each month’s interest depends on the number of days in the period and leap years are counted as 366 days.
Before you borrow
The calculator assumes a fixed rate for the whole term. Variable-rate loans change payment when the rate resets, and origination fees, prepayment penalties and insurance add to the true cost. Compare offers by their APR as well as the monthly payment, and use these results as an estimate rather than a quote.
Frequently asked questions
- How is the monthly payment calculated?
- For an amortizing loan, payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the number of payments. A $25,000 loan at 7.5% for 5 years costs about $500.95 a month.
- What is the difference between equal payments and equal principal?
- With equal payments, every installment is the same, with more interest at the start. With equal principal, you repay the same amount of principal each month plus interest on the remaining balance, so payments start higher and fall over time. Equal principal costs less interest in total.
- What is an interest-only period?
- For the first months you pay only interest, and the balance does not go down. The principal is then repaid over the remaining term, which makes later payments larger and increases total interest.
- Why is the last payment slightly different?
- Payments are rounded to the cent. The small differences add up, and the final payment settles the exact remaining balance.
- Which interest method should I use?
- US lenders usually charge one twelfth of the annual rate each month, which is the default here. Some lenders, including most Korean banks, charge interest on the actual number of days in each period. You can switch methods in the advanced options.
- Does this include fees, taxes or insurance?
- No. The calculator covers principal and interest only. For a home loan with property tax, insurance and PMI, use the mortgage calculator.