Amortization Calculator
Understanding Loan Amortization
What is Amortization?
Amortization is the process of spreading out a loan into a series of fixed payments over time. Each payment consists of both principal and interest, with the proportion of principal increasing and interest decreasing over the loan term.
Key Components
- Principal: The initial amount borrowed
- Interest Rate: The annual cost of borrowing, expressed as a percentage
- Loan Term: The time period over which the loan will be repaid
- Monthly Payment: The fixed amount paid each month, including both principal and interest
How to Use This Calculator
- Enter your total loan amount
- Specify the loan term in years
- Input the annual interest rate
- Click "Calculate" to see your payment schedule
Common Uses
- Mortgage loan planning
- Auto loan comparison
- Personal loan analysis
- Business loan evaluation
Tips for Loan Management
- Making extra payments can significantly reduce the total interest paid
- Compare different loan terms to find the best balance between monthly payments and total cost
- Consider refinancing if interest rates drop significantly
- Keep track of your amortization schedule to understand your loan progress