A loan amortization calculator shows you exactly where every dollar of your monthly payment goes: how much covers interest, how much chips away at the principal, and how long until the balance reaches zero. Most borrowers only look at the monthly payment number, but that number hides the real story — over a typical five-year car loan or three-year personal loan, interest can add thousands of dollars on top of what you originally borrowed. This page lets you see that breakdown line by line, month by month.
Adjust the sliders and every figure updates instantly. Add a small extra monthly amount and watch the payoff date move earlier and the total interest shrink — often by hundreds or thousands of dollars.
How to Use
- Enter the Loan Amount (Principal) — the amount you actually received from the lender, before origination fees or interest.
- Set the Interest Rate (APR). If you are shopping around, type in the rate you were quoted; you can also nudge it up or down by 0.5% to see how sensitive your payment is.
- Choose the Loan Term in years. A 5-year term is typical for personal loans and new-car loans; 3- or 4-year terms are common for used cars.
- Optionally add an Extra Monthly Payment. Even $25 or $50 a month makes a surprising difference over the life of a loan.
- Read the result card: your fixed monthly payment, the total interest you will pay, the total amount repaid, and the number of months it actually takes to reach a zero balance.
- Scroll down to the amortization schedule to see, for each month, the payment, the interest portion, the principal portion, and the remaining balance.
The table is the most useful part of this page. Early in the loan, most of your payment is interest; toward the end, almost all of it is principal. That is why prepaying early — when the interest portion is largest — saves you the most money.
The Amortization Formula
Your fixed monthly payment comes from the standard amortization formula used by Fannie Mae, Freddie Mac, and every major US lender:
M = P × r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
Where:
- M is the monthly payment.
- P is the loan amount (principal).
- r is the monthly interest rate — the annual APR divided by 12.
- n is the total number of monthly payments — the loan term in years times 12.
Worked example on a $20,000 loan at 5.0% for 5 years: the monthly rate is 0.004167, and n = 60. Plugging in gives a monthly payment of $377.42. Over 60 months you repay $22,645.48 in total, which means $2,645.48 of interest on top of the original $20,000.
If the rate is 0%, the formula divides by zero, so the engine simply splits the principal evenly across the number of months: $20,000 over 60 months is $333.33 per month, with $0 interest.
How the Schedule Builds Each Month
Every month, the lender first charges interest on whatever balance you currently owe. The rest of your fixed payment goes toward reducing that balance:
- Interest this month = current balance × monthly rate.
- Principal this month = monthly payment − interest this month.
- New balance = current balance − principal this month.
Because the balance shrinks every month, the interest portion shrinks too, and the principal portion grows. That is why the same $377.42 payment breaks down differently in month 1 versus month 60.
If you add an extra monthly payment, the entire extra amount goes straight to principal (there is no interest charged on it). Your fixed monthly payment does not change, but the balance reaches zero earlier — and every month that gets cut off is a month on which you no longer pay interest.
Examples
Example 1 — A $20,000 personal loan at 5% for 5 years. With no extra payment, your monthly bill is $377.42, total interest is $2,645.48, and you finish in exactly 60 months. This is the baseline most borrowers compare against.
Example 2 — Adding $50 a month. On the same $20,000 loan at 5.0% for 5 years, paying an extra $50 each month toward principal shortens the loan to roughly 52–53 months and cuts total interest to around $2,250 — saving about $400 with no change to your budget beyond that $50. Slide the Extra Monthly Payment control upward to see your own numbers.
Example 3 — A large loan: $1,000,000 at 6.5% for 30 years. The monthly payment is about $6,320.68, and total interest over 30 years reaches roughly $1,275,445 — more than the original principal. Running this scale of number shows why a small rate difference on a large, long loan is worth hundreds of thousands of dollars, and why refinancing or prepaying can be so powerful.
Example 4 — A 0% balance-transfer offer. On a $20,000 loan at 0% for 5 years, the monthly payment is simply $333.33 and total interest is $0.00. The engine handles the zero-rate edge case without dividing by zero, so you can model promotional financing offers accurately.
FAQ
How is a loan monthly payment calculated?
The payment uses the standard amortization formula M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (annual APR divided by 12), and n is the number of monthly payments (years times 12). This is the same formula used by Fannie Mae, Freddie Mac, and major US lenders for mortgages, auto loans, and personal loans.
What is the difference between interest and principal in my payment?
Each month, your payment is split into two parts. The lender first charges interest on the balance you currently owe — that is the interest portion. Whatever is left after covering interest reduces the principal. Early in the loan, interest dominates; later, principal dominates. The amortization schedule on this page shows that split for every single month.
Does paying extra toward the principal save money?
Yes. Every extra dollar you pay reduces the balance, which reduces the interest charged next month. On a $20,000 loan at 5% over 5 years, adding just $50 a month typically cuts roughly 6–8 months off the term and saves several hundred dollars in interest. Check your loan for any prepayment penalty first — most personal and auto loans do not have one, but some older mortgages do.
What is a good interest rate on a personal loan?
As of recent market conditions, rates for well-qualified borrowers commonly range from about 6% to 10% APR for three- to five-year personal loans, while borrowers with weaker credit can be quoted 15% or more. A 5% rate is on the low end; above 15%, interest costs can double or triple the total amount repaid. Compare at least three lenders before signing.
What happens if I miss a payment?
A missed payment usually triggers a late fee (often $25–$40), and the lender may report the late payment to credit bureaus after 30 days. The interest that month still accrues on the full balance, and the loan balance does not go down as planned — meaning you will pay more interest over the life of the loan. Contact your lender early if you expect trouble; most will waive a one-time late fee for borrowers in good standing.
Can I pay off a loan early without penalty?
Most modern personal loans, auto loans, and student loans have no prepayment penalty, so you can pay extra or settle the balance in full at any time. Some older mortgages and a few installment loans do charge a small penalty (typically a percentage of the remaining balance). Check your promissory note or call your servicer to confirm before making a large early payment.
Disclaimer
This loan amortization calculator is provided for informational purposes only and does not constitute financial, lending, or tax advice. Estimates are based on the inputs you enter and the standard amortization formula; actual loan terms, rates, fees, and late-payment handling vary by lender, credit profile, and program. Always confirm your final payment, total interest, and any prepayment penalty directly with your lender before committing to a loan.