Amortization Calculator – Loan Schedule, Extra Payments and Early Payoff
The Amortization Calculator helps you understand exactly how a loan is repaid over time. Rather than only looking at the interest rate and monthly payment, you can see how much of each payment goes toward interest, how quickly principal declines and how extra payments, lump sums or biweekly schedules change the payoff timeline and total cost.
Whether you are comparing mortgages, auto loans, personal loans or other installment debts, an amortization schedule gives you a transparent view of the true cost of borrowing. This calculator lets you generate a standard schedule, test extra monthly contributions, apply a lump-sum payment, compare monthly and biweekly payment plans and calculate how much you need to pay to hit an early payoff goal.
How the Amortization Calculator Works
This tool is organized into five modes so you can analyze your loan from different angles:
- Standard Amortization: Creates a traditional payment schedule with equal payments.
- Extra Monthly Payments: Adds an extra amount to each payment to reduce principal faster.
- Lump-Sum Payment: Applies a one-time extra payment at a chosen period.
- Biweekly Payments: Compares regular monthly payments with biweekly payments.
- Early Payoff Goal: Calculates the required payment to finish in a shorter term.
All modes use a standard fixed-rate amortization model and the same core formula. You can enter a loan amount, interest rate, term length and payment frequency and the calculator will output payment size, total interest and payoff characteristics.
Standard Amortization: Payment and Schedule
In the Standard Amortization mode, you specify the loan amount, annual interest rate, term in years and number of payments per year. The calculator converts the annual rate into a periodic rate and uses it to compute the fixed payment that fully repays the loan by the end of the term.
Loan Payment Formula
Here, P is the loan principal, r is the periodic interest rate (annual rate divided by payments per year) and n is the total number of payments. If the interest rate is zero, the payment is simply P ÷ n.
The amortization schedule then breaks each payment into:
- Interest portion = Current balance × r
- Principal portion = Payment − Interest
- New balance = Previous balance − Principal portion
This continues until the loan is fully paid off, giving you a clear picture of interest versus principal over time.
Extra Monthly Payments Mode
The Extra Monthly Payments mode shows how adding a fixed extra amount to every payment changes your loan. Extra payments go directly toward principal, which reduces the balance faster. Because interest is calculated on the remaining balance, this can significantly reduce total interest and shorten the loan term.
How Extra Payments Affect Amortization
Each period, interest is calculated on the current balance. The combined payment reduces principal by a larger amount than the standard schedule. As a result, the loan reaches zero earlier than originally planned, and you pay fewer total interest dollars.
Lump-Sum Payment Mode
The Lump-Sum Payment mode models a one-time extra payment at a specific payment number, such as when you receive a bonus or sell an asset. The calculator first computes the standard schedule, then applies the lump sum at the chosen period and recomputes the remaining timetable, showing a new payoff time and interest savings.
Lump Sum Effect
When you make a lump-sum payment, you immediately reduce the principal balance. Future interest is then calculated on this lower balance, resulting in fewer payments, lower total interest, or both. Many lenders allow you to keep the same payment amount and shorten the term, which is what this mode models.
Biweekly Payments Mode
In the Biweekly Payments mode, the calculator compares a standard monthly schedule with a biweekly plan. Instead of making one monthly payment, you make half of that payment every two weeks. Since there are 52 weeks in a year, you make 26 biweekly payments, which equals 13 full monthly payments.
Monthly vs Biweekly
The calculator computes:
- Standard monthly payment based on 12 payments per year.
- Biweekly payment based on the same formula but with 26 payments per year.
- Difference in total interest between the two approaches.
- Time saved by using biweekly payments.
For many borrowers, biweekly payments offer a convenient way to accelerate payoff without significantly increasing perceived payment burden.
Early Payoff Goal Mode
The Early Payoff Goal mode lets you choose a shorter target term and calculates the payment required to meet that goal. It also compares this payment to your standard payment and estimates approximate interest savings.
Payment for Target Term
Where ntarget is the total number of payments over the shorter target term. The difference between the required payment and standard payment is the extra amount you need to contribute each period to reach your goal.
Why Amortization and Extra Payments Matter
Loans can represent a large portion of household budgets. Understanding amortization helps you make better financial decisions, such as:
- Comparing different loan offers on more than just rate and term.
- Seeing how much interest you pay over the full life of the loan.
- Choosing between making extra payments, investing or saving.
- Planning for milestones such as paying off a mortgage or car loan early.
Small changes in payment size and timing can have a sizable impact on total interest cost and payoff time. This calculator gives you a way to see that impact before making a decision.
Examples of Amortization and Payoff Strategies
Example 1: Standard 30-Year Mortgage
Consider a $250,000 mortgage at 5% with monthly payments over 30 years. The calculator computes a monthly payment, total interest over the full term and a detailed amortization schedule. You can see that early payments are mostly interest, while later payments are mostly principal.
Example 2: Extra $200 per Month
Adding a $200 extra monthly payment to the same mortgage dramatically reduces total interest and knocks several years off the payoff date. The Extra Monthly Payments mode quantifies the time saved and interest saved.
Example 3: Lump Sum at Year 5
If you make a $10,000 lump-sum payment after five years, the Lump-Sum Payment mode shows a new payoff time and interest savings compared with the original schedule. This can help you decide how to allocate a bonus, inheritance or other windfall.
Example 4: Biweekly vs Monthly
Switching from monthly to biweekly payments on a long-term loan means you effectively make one extra payment per year. The Biweekly mode reveals how many months you might shave off the loan and how much interest you can save.
Example 5: Early Payoff in 20 Years Instead of 30
If your mortgage is scheduled for 30 years but you want to finish in 20, the Early Payoff Goal mode tells you the payment amount needed. You can then decide whether that level of payment fits your budget.
How to Use This Tool Effectively
- Start with Standard Amortization to understand your base loan schedule and total interest.
- Use Extra Monthly Payments to test how different extra amounts change your payoff date.
- Try Lump-Sum Payment when you are planning a one-time extra payment.
- Compare Biweekly Payments with standard monthly payments if your income is biweekly.
- Use Early Payoff Goal to set a clear target and required payment amount.
- Revisit the calculator when rates, goals or income change to keep your plan up to date.
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Amortization Calculator FAQs
Frequently Asked Questions About Amortization and Loan Payoff
Find quick answers about how amortization works, how payments are calculated and how extra payments influence your loan.
Amortization is the process of repaying a loan through equal periodic payments that cover both interest and principal. Over time, the interest portion decreases and the principal portion increases, while the total payment stays the same for fixed-rate loans.
Interest is calculated as a percentage of the remaining balance. At the beginning of the loan, the balance is highest, so interest charges are largest. As you pay down principal, the balance falls and less of each payment goes to interest.
No. Many lenders apply extra payments directly to principal, but policies can differ. Some may advance the due date instead of shortening the schedule. Always check your loan agreement or ask your lender how extra payments are handled.
This calculator assumes a fixed interest rate. Adjustable-rate loans change over time, so their schedules are more complex. You can still model sections of an ARM using a constant rate, but results will be approximate.
No. The calculator focuses on principal and interest amortization. Property taxes, insurance and other charges are often paid separately or through escrow and are not included in the amortization schedule here.
No. The calculator is an educational tool. For binding terms, costs and legal information, always rely on official lender documents and, if needed, speak with a qualified professional.