Amortization Calculator

An amortization schedule is the period-by-period breakdown of a fixed-rate loan payment into interest and principal, plus the running balance. Each period's interest = remaining balance × (APR ÷ 12); the rest of the fixed payment reduces principal. Because the balance shrinks every period, the interest portion shrinks and the principal portion grows — even though the total payment stays the same for the life of the loan.

Every extra dollar — recurring monthly or a one-time lump sum — comes straight off principal, which permanently lowers the balance every future period is charged interest on. The earlier in the loan you make the extra payment, the more periods it saves interest on, so the same dollar amount saves more when applied in year 1 than year 20. Enter your extra payment above to see the exact interest saved and months cut for your loan.

A recurring extra monthly payment compounds every period for the rest of the loan — smaller amounts add up over years. A one-time lump sum (e.g., a bonus, tax refund, or inheritance) reduces the balance once, at the payment number you specify, and every payment after that is calculated against the smaller balance. Both strategies reduce total interest and shorten the payoff date; this calculator lets you combine both to see the effect together.

The scheduled monthly payment is fixed by the original loan terms (amount, rate, term). Extra payments don't change that fixed payment — they add on top of it, which pays down principal faster than the amortization schedule originally required. Once the balance reaches zero, the loan is paid off, even though you're still `n` months short of the original term — that's the 'months cut' figure above.