What Is Loan Amortization?
Loan amortization is the process of paying off a loan through regular scheduled payments. Each payment covers both interest and principal, but the ratio shifts over time — early payments are mostly interest; later payments are mostly principal.
With a standard amortizing loan, your monthly payment stays the same throughout the loan term, but your balance decreases faster as you get closer to payoff.
What an Amortization Schedule Shows
Use tool.tl's loan amortization calculator to generate a complete schedule showing for each period:
- Total payment amount
- Principal portion
- Interest portion
- Remaining balance after payment
- Cumulative interest paid to date
How to Use the Calculator
- Go to tool.tl/loan-amortization
- Enter loan amount, annual interest rate, and loan term
- Optionally set an extra monthly payment amount
- View monthly payment, total interest, and the full payment table
Sample Amortization Schedule
$200,000 loan, 6.5% APR, 30-year term — first and last 3 payments:
| Month | Payment | Principal | Interest | Balance |
|---|
| 1 | $1,264 | $181 | $1,083 | $199,819 |
| 2 | $1,264 | $182 | $1,082 | $199,637 |
| 3 | $1,264 | $183 | $1,081 | $199,454 |
| … | … | … | … | … |
| 358 | $1,264 | $1,244 | $20 | $2,506 |
| 359 | $1,264 | $1,251 | $13 | $1,255 |
| 360 | $1,264 | $1,255 | $7 | $0 |
30-year total interest: $255,088 — 127% of the original loan amount.
On the same $200,000, 6.5%, 30-year loan — adding just $200/month extra:
- Loan paid off: 7.5 years early (in ~22.5 years)
- Interest saved: $78,350
Common Uses
- Mortgages: See how much principal you've actually paid after 5 or 10 years
- Auto loans: Evaluate whether early payoff makes financial sense
- Personal loans: Compare total cost vs other financing options
- Business loans: Plan cash flow with a clear view of principal vs interest each period
Frequently Asked Questions
Why does so little principal get paid early on?
Early payments go mostly to interest because the outstanding balance is at its highest. As the balance shrinks, each payment's interest portion decreases and principal portion grows — this is how amortization works.
What loan types does the calculator support?
Any fixed-rate, equal-payment loan: mortgages, auto loans, personal loans, student loans, business loans. Enter your specific numbers and the math works for all of them.
Is it free?
Yes — tool.tl's loan amortization calculator is completely free with no account required.