# Amortization Calculator

## Calculator Use

This amortization schedule calculator allows you to create a payment table for a loan with equal loan payments for the life of a loan. The amortization table shows how each payment is applied to the principal balance and the interest owed.

**Payment Amount = Principal Amount + Interest Amount**

Say you are taking out a mortgage for $275,000 at 4.875% interest for 30 years (360 payments, made monthly). Enter these values into the calculator and click "Calculate" to produce an amortized schedule of monthly loan payments. You can see that the payment amount stays the same over the course of the mortgage. With each payment the principal owed is reduced and this results in a decreasing interest due.

Most typical car loans and mortgages have an amortization schedule with equal payment installments. The payment amount is the same over the life of the loan but the way the payment is applied changes: the portion of the payment applied toward the principal
*increases* over time, and the portion applied to interest
*decreases* because you owe less principal.

- Loan Amount
- The size or value of the loan.
- Interest Rate
- The annual stated rate of the loan.
- Number of Payments
- The total number of payments, initial or remaining, to pay off the given loan amount.
- Payment Frequency
- How often is the loan payment due? Typically loan payments are due monthly, but several options are provided on the calculator.
- Compounding
- This calculator assumes that compounding coincides with payments. If payment and compounding frequency do not coincide, you should use the Loan Calculator with Compounding so that the interest rate is calculated in terms of payments.

## Amortization Calculations:

A loan can also be amortized with fixed principal payments. In this case the principal amount remains the same as the loan is paid off. The interest charged decreases so the monthly payment also decreases.

The basic calculation for the amortization schedule uses our mortgage payment calculator formula.