Amortization Calculator
If you choose Monthly, monthly schedule will show real month/year labels; otherwise labels are P1,P2…
Currency: $ (USD)
Payment (per period)
$0.00Total Interest
$0.00Total Paid
$0.00Monthly Schedule
Annual Schedule
# | Period | Payment | Principal | Interest | Extra | Ending Balance |
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Year | Payments | Principal | Interest | Ending Balance |
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Amortization Schedule
Year | Interest | Principal | Ending Balance |
---|---|---|---|
1 | $11,769.23 | $8,483.33 | $191,516.67 |
2 | $11,246.00 | $9,006.57 | $182,510.10 |
3 | $10,690.49 | $9,562.07 | $172,948.02 |
4 | $10,100.72 | $10,151.84 | $162,796.18 |
5 | $9,474.58 | $10,777.98 | $152,018.20 |
6 | $8,809.82 | $11,442.75 | $140,575.45 |
7 | $8,104.05 | $12,148.51 | $128,426.94 |
8 | $7,354.76 | $12,897.80 | $115,529.13 |
9 | $6,559.25 | $13,693.31 | $101,835.82 |
10 | $5,714.68 | $14,537.89 | $87,297.94 |
11 | $4,818.01 | $15,434.55 | $71,863.38 |
12 | $3,866.04 | $16,386.52 | $55,476.86 |
13 | $2,855.36 | $17,397.21 | $38,079.66 |
14 | $1,782.34 | $18,470.23 | $19,609.43 |
15 | $643.13 | $19,609.43 | $0.00 |
Month | Interest | Principal | Ending Balance |
---|---|---|---|
1 | $1,000.00 | $687.71 | $199,312.29 |
2 | $996.56 | $691.15 | $198,621.13 |
3 | $993.11 | $694.61 | $197,926.53 |
4 | $989.63 | $698.08 | $197,228.45 |
5 | $986.14 | $701.57 | $196,526.87 |
6 | $982.63 | $705.08 | $195,821.79 |
7 | $979.11 | $708.60 | $195,113.19 |
8 | $975.57 | $712.15 | $194,401.04 |
9 | $972.01 | $715.71 | $193,685.33 |
10 | $968.43 | $719.29 | $192,966.05 |
11 | $964.83 | $722.88 | $192,243.16 |
12 | $961.22 | $726.50 | $191,516.67 |
Amortization Calculator: Your Complete Guide to Loans, Payments & Business Costs
Most people don’t wake up thinking about amortization. In fact, it sounds like one of those finance words that belong in textbooks or accountant offices. But here’s the truth: amortization isn’t just “finance jargon.” It’s something that quietly shapes your financial life almost every day. When you make a mortgage payment, pay off your car loan, or even consider how a business spreads out the cost of an expensive patent, you’re dealing with amortization. It is the simple but powerful idea of taking a large financial obligation and breaking it down into manageable pieces over time. Think about the difference it makes. Imagine buying your home in cash; most people can’t do that. Instead, they spread the cost over 20 or 30 years, but make steady monthly payments. That’s amortization at work. Or take a startup business that spends $100,000 on intellectual property. If they deducted it all in one year, their books would look disastrous. Instead, accounting rules allow them to amortize the cost across many years, keeping finances realistic. Understanding amortization gives you clarity. It tells you how much of each payment goes toward the actual debt and how much is just covering interest. It shows you the true cost of borrowing. And in the business world, it helps owners plan better, track profits more accurately, and avoid misleading financial statements. If you ignore it, you risk falling into financial traps. Borrowers who don’t grasp how amortization works often underestimate the total cost of their loans. Businesses that fail to amortize correctly can overstate profits, which leads to bad decisions and even tax trouble. That’s why an amortization calculator isn’t just another tool. It’s not about crunching numbers for the sake of it. It’s about telling you a story: how your loan shrinks over time, how much interest you’ll actually pay, and what your path to financial freedom looks like. Whether you’re a homeowner, a car buyer, a student borrower, or an entrepreneur, understanding amortization can make the difference between being in control of your money or being controlled by it.What Is Amortization?
Amortization has two main meanings, and while they apply in different settings, they share the same underlying principle: spreading something big out over time.1. Amortization as Loan Repayment
This is the definition most people encounter. When you take out a mortgage, student loan, or car loan, you don’t pay it back all at once. Instead, you make regular payments, usually monthly, that include two parts: interest and principal. Interest is the cost of borrowing, while principal is the original amount you owe. Over time, the balance shifts: early payments are heavy on interest, but as you chip away at the debt, more of your payment goes toward principal.2. Amortization in Accounting
In the business world, amortization takes on another meaning. Here, it refers to the gradual expense of intangible assets, things you can’t touch, like patents, copyrights, or goodwill. Instead of recording a massive expense in one year, companies spread the cost across the asset’s useful life. This makes financial reports more realistic and helps investors or owners understand how the asset contributes to earnings over time.Why People Confuse the Two
The confusion is natural: in both cases, amortization is about spreading cost or debt across time. The difference is who’s doing the spreading. A borrower spreads loan repayment across months or years. A business spreads the expense of an intangible asset across its lifespan.Example to Bring It Home
Picture this:- A homeowner takes out a $250,000 mortgage. Instead of paying the full price upfront, they commit to 30 years of monthly payments. Each payment chips away at the balance while covering interest. That’s loan amortization.
- A technology company buys a patent for $100,000, with a 10-year life. Rather than expensing all $100,000 in year one, it records $10,000 per year as an amortization expense. That’s accounting amortization.
Paying Off a Loan Over Time
When most people hear the word amortization, they think about loans, and for good reason. Mortgages, student loans, and personal loans all use amortization to structure payments. Here’s how it works: Every monthly payment you make is divided between interest (the lender’s charge for letting you borrow) and principal (the actual debt you owe). The clever part is that while your payment amount usually stays the same, the mix between interest and principal shifts over time.Breaking Down an Example
Let’s take a $200,000 mortgage at a 6% interest rate, spread over 30 years. Your monthly payment would be about $1,199. In your very first payment, around $999 goes to interest, and only $200 reduces the principal. Fast forward 20 years, and the opposite is true: most of your payment goes toward principal, with only a small slice covering interest. This pattern can surprise borrowers. In the early years, it feels like you’re not making progress. That’s because interest is calculated on the outstanding balance. When the balance is high, the interest is too. But as the balance shrinks, so does the interest, freeing up more of each payment to attack the principal.Loans That Aren’t Amortized
Not every debt works this way. Credit cards, for example, are revolving debt. You can borrow, repay, and borrow again, with no fixed end date. That means no standard amortization schedule. Other non-amortized loans include:- Interest-only loans: Where payments cover just the interest for a period, with the principal due later.
- Balloon loans: Where small payments are made along the way, but a large lump sum (the “balloon”) is due at the end.
Why Amortization Matters
The beauty of amortization is predictability. You know exactly what you owe each month, and you can see the finish line. It instills discipline by forcing consistent payments, unlike revolving credit, which can drag on for years. For borrowers, understanding amortization helps in two ways:- You see the true cost of borrowing, not just the monthly number.
- You can plan smarter, knowing how extra payments early on can save thousands in interest.
Amortization Schedules: Your Payment Roadmap
If amortization is the journey of paying off a loan, then the amortization schedule is the map. Also called an amortization table, this tool lays out every single payment you’ll make, showing exactly how much goes to interest, how much to principal, and how the balance shrinks month by month. At first glance, it looks like a grid of numbers. But look closer, and you’ll see the story unfold: in year one, interest dominates. By year 15, the tide has turned, and most of your payment chips away at principal.A Simple Example
Take a $10,000 car loan with a 5-year term and 6% interest. The monthly payment is about $193. In month one, $50 is interest, $143 is principal. By the last payment, interest has dropped to just a few dollars, and nearly the entire payment erases the final chunk of debt.Why This Matters
For borrowers, the schedule answers vital questions:- How much interest will I pay over the life of the loan?
- How much equity will I have in my home after 5 years?
- What happens if I pay an extra $100 each month?
Limitations
Most schedules assume fixed-rate loans. They don’t factor in fees or penalties. They also don’t automatically account for extra payments, although good calculators, like ours, can handle these scenarios.The Big Picture
An amortization schedule is more than numbers in a table. It’s financial transparency. It shows you where your money is going, helps you plan future payments, and reveals how small decisions like adding a little extra to principal can dramatically shorten your debt timeline.Beyond Loans: Amortization in Business & Accounting
When most people think of amortization, they picture mortgages and car loans. But in the business world, amortization has another role, one that deals not with debt, but with assets. Specifically, intangible assets. Here’s the key distinction:- Depreciation applies to tangible assets, things you can see and touch, like buildings, machines, and vehicles.
- Amortization applies to intangible assets, assets with value but no physical form, like patents, copyrights, trademarks, and goodwill.
A Simple Example
Imagine a tech startup buys a patent for $120,000 with a useful life of 15 years. Under US tax law (specifically Section 197 of the Internal Revenue Code), most acquired intangibles must be amortized over 15 years. That means the company would record an $8,000 expense every year for 15 years. It’s the same total cost, just spread out in a way that matches how the patent supports the business.Not All Intangibles Are Treated the Same
Some intangible assets don’t get amortized:- Goodwill that has an indefinite life isn’t amortized but tested annually for impairment.
- Self-created intangibles, like a trademark a company designs itself, typically aren’t amortized for tax purposes.
- Certain software costs may be amortized depending on whether they’re developed or purchased.
Amortizing Startup Costs
Starting a business is exciting, but it comes with costs, and those costs can’t just be written off all at once. The IRS requires many startup expenses to be amortized, spreading them out over years instead of allowing a giant deduction up front. What counts as startup costs? Things like:- Fees for consultants or lawyers who help set up the business.
- Market research and surveys.
- Advertising and promotional expenses before the business officially opens.
- Travel costs for securing suppliers or customers.
How the Amortization Calculator Helps You
By now, you’ve seen how complex amortization can be. Whether it’s breaking down a mortgage, paying off a student loan, or allocating business expenses, the math behind it isn’t always straightforward. That’s where an amortization calculator becomes indispensable. Instead of wrestling with spreadsheets or guesswork, a calculator does the heavy lifting:- It builds amortization schedules automatically, showing month-by-month how much of your payment goes to interest and principal.
- It accounts for loan terms, interest rates, and extra payments, letting you test different scenarios. Want to see what happens if you add $100 more to your monthly mortgage? The calculator shows you instantly.
- For businesses, it can help visualize the impact of amortizing startup costs or intangible assets, showing how expenses affect profits year after year.