Amortization Schedule Calculator
- Principal
- Interest
Right-hand figures are the balance left after each payment. From payment 17, more of each payment goes to principal than to interest.
How the amortization schedule calculation works
Work out the fixed payment
Payment = loan × r ÷ (1 − (1 + r)^−n), with r the yearly rate ÷ 12 and n the months. $250,000 at 8% over 10 years is $3,033.19 a month.
Each month, interest is charged on the balance
Month 1 interest is $250,000 × 8% ÷ 12 = $1,666.67. The rest of the payment, $1,366.52, pays down principal.
The new balance sets next month's interest
After month 1 you owe $248,633.48, so month 2 interest drops to $1,657.56 and principal rises to $1,375.63.
Early years are mostly interest
In year 1 you pay $19,385.17 of interest and $17,013.11 of principal. From payment 17 onward, principal is the larger part.
Worked example. A $250,000 loan at 8% over 10 years costs $3,033.19 a month. The first payment is $1,666.67 interest and $1,366.52 principal. After year 1 you owe $232,986.89, and over all 120 payments interest totals $113,982.78.
Amortization Schedule FAQ
What is an amortization schedule?
A table of every loan payment showing how much goes to interest, how much to principal, and the balance left afterwards. Payments stay the same while the split shifts toward principal.
How do I calculate an amortization schedule by hand?
Find the payment with the formula, then for each month multiply the balance by the monthly rate to get interest, subtract that from the payment to get principal, and subtract principal from the balance.
Why is so much of my early payment interest?
Interest is charged on the balance, which is largest at the start. As the balance falls, interest shrinks and more of each payment repays the loan.
How do I make an amortization schedule in Excel?
Use =PMT(rate/12, years*12, -loan) for the payment, =IPMT(rate/12, month, years*12, -loan) for interest and =PPMT(rate/12, month, years*12, -loan) for principal in each row.
What is the amortization formula?
Payment = P × r ÷ (1 − (1 + r)^−n), where P is the loan amount, r the monthly rate (yearly rate ÷ 12) and n the number of monthly payments. Each month, interest = balance × r and principal = payment − interest.
How does the loan term change the schedule?
A longer term lowers the payment but raises total interest. At $250,000 and 8%, 5 years costs $5,069.10 a month and $54,145.91 of interest; 10 years, $3,033.19 and $113,982.78; 15 years, $2,389.13 and $180,043.44.
Can I add extra payments to the schedule?
This table assumes equal payments only. To see how extra or lump-sum payments shorten the loan and cut interest, use the loan payoff calculator.
Does this work for a car, equipment or mortgage loan?
Yes, for any fixed-rate loan with equal monthly payments. Loans with a balloon or interest-only period need the balloon or interest-only calculators.
Sources: Microsoft Support: PMT function · Microsoft Support: IPMT function · Microsoft Support: PPMT function