Short answer: enter your loan amount, interest rate, and term above to get your exact monthly payment, total interest, and a full year-by-year (and optional month-by-month) breakdown of principal versus interest. Add an extra monthly payment to see how much interest you save and how many months sooner you’re done.
How to use this calculator
- Loan amount — the principal you’re borrowing (the price minus any down payment).
- Annual interest rate — the loan’s APR as a yearly percentage.
- Loan term (years) — how long you have to repay: 5 for many auto and personal loans, 15 or 30 for mortgages.
- Extra principal per month (optional) — any additional amount paid straight toward the principal. This shows your interest savings and earlier payoff date.
Click “View monthly schedule” to expand the complete month-by-month table. All math runs in your browser; nothing is uploaded anywhere.
The amortization formula
Every fixed-rate installment loan in the US — mortgages, auto loans, personal loans — uses the same formula:
Monthly payment = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)
Where P is the principal, r the monthly interest rate (annual rate ÷ 12), and n the total number of payments. Each payment is split: interest = remaining balance × r comes first, and whatever is left reduces the principal. Because the balance shrinks, the interest slice gets smaller every month and the principal slice grows — that’s amortization.
Worked example: $25,000 at 7.5% for 5 years (60 payments):
- Monthly rate: 0.075 ÷ 12 = 0.00625
- Monthly payment: $500.95
- Total paid: $30,056.92
- Total interest: $5,056.92
In month 1, $156.25 of the payment is interest and $344.70 is principal. By month 60, only about $3 is interest. Same payment every month — completely different composition.
Why the early years feel so slow
On long loans, amortization is brutally front-loaded toward interest. Take a $400,000 mortgage at 7% for 30 years ($2,661/month):
- After 5 years of payments ($159,660 paid), you’ve reduced the balance by only about $25,000. The other ~$135,000 was interest.
- After 10 years, you still owe roughly $342,000.
- You don’t cross the halfway point on the balance until around year 19.
This isn’t a trick — it’s just math: 7% of $400,000 is $28,000 a year in interest, while your first-year payments total only ~$31,900. Understanding this is the single best argument for making extra principal payments early, when each extra dollar wipes out the most future interest.
How extra payments change everything
Extra principal payments attack the balance directly, which shrinks every future interest charge. On that $25,000 / 7.5% / 5-year loan:
| Extra per month | Payoff time | Interest saved |
|---|---|---|
| $0 | 60 months | — |
| $50 | ~54 months | ~$480 |
| $100 | ~49 months | ~$880 |
| $200 | ~42 months | ~$1,470 |
Notice the pattern: extra payments both cut interest and shorten the loan. There’s no prepayment penalty on most US consumer loans, but always confirm yours has none before overpaying — some auto loans and older mortgages still include them.
Fixed vs. variable rates
This calculator models fixed-rate loans, where the payment never changes. With a variable/adjustable-rate loan (like a 5/1 ARM), the rate — and therefore the payment — resets periodically. You can still use this calculator to model each fixed period separately: run it once with the initial rate and term, then again with the new rate and remaining balance.
Amortization vs. simple interest
Most US installment loans use amortization as described here. Some subprime auto loans and “add-on interest” loans instead use precomputed interest, where the total interest is calculated upfront and added to the balance — paying early barely helps because the interest is already baked in. If your loan uses the Rule of 78s or precomputed interest (it must be disclosed in your loan documents), this calculator’s extra-payment savings won’t apply the same way.
The biweekly payment trick
One painless way to make extra payments: switch to biweekly half-payments. Instead of $2,661 once a month, you pay $1,330.50 every two weeks. Since there are 26 biweekly periods in a year, you make 26 half-payments = 13 full monthly payments per year instead of 12. That one extra payment per year goes entirely to principal.
On the $400,000 / 7% / 30-year mortgage:
| Monthly | Biweekly | |
|---|---|---|
| Payment rhythm | $2,661 × 12 | $1,330.50 × 26 |
| Paid per year | $31,932 | $34,593 |
| Payoff time | 30 years | ~25 years |
| Total interest | ~$558,000 | ~$455,000 |
You save roughly $100,000 in interest and finish 5 years early — without ever feeling a large extra payment. Two cautions: make sure your servicer actually applies the extra to principal (some hold it in suspense), and confirm there’s no prepayment penalty.
Refinancing: when the math says yes
Refinancing replaces your loan with a new one at a lower rate — restarting amortization, but at cheaper interest. The decision comes down to the breakeven point:
Breakeven (months) = closing costs ÷ monthly savings
Example: you owe $350,000 at 7.5% with 25 years left ($2,586/mo). You can refinance to 6.25% for 25 years ($2,309/mo). Closing costs: $6,000.
- Monthly savings: $278
- Breakeven: $6,000 ÷ $278 ≈ 22 months
- If you’ll stay in the home longer than ~2 years, refinancing wins. If you might move in a year, it loses.
Rules of thumb lenders cite: refinance when the rate drops by about 0.75–1 percentage point and your breakeven is comfortably shorter than your expected stay. Also compare the total interest of the new loan against the remaining interest on the old one — a lower rate over a longer new term can cost more overall, which is exactly what the calculator’s totals reveal.
What affects your payment most: rate vs. term
Two levers move your monthly payment — the interest rate and the term. Here’s what they do to a $300,000 loan (principal & interest only):
| Rate / Term | Monthly payment | Total interest |
|---|---|---|
| 6% / 30 yrs | $1,799 | $347,515 |
| 7% / 30 yrs | $1,996 | $418,527 |
| 8% / 30 yrs | $2,201 | $492,466 |
| 6% / 15 yrs | $2,532 | $155,683 |
| 7% / 15 yrs | $2,696 | $185,367 |
Three takeaways:
- One percentage point is expensive. On a 30-year loan, each extra point of rate adds ~$200/month and ~$70,000+ in lifetime interest. Rate-shopping between lenders genuinely matters.
- Shortening the term is the biggest interest-saver. A 15-year loan at 7% costs $700 more per month than the 30-year version — but saves over $230,000 in interest.
- Don’t judge a loan by its payment alone. The 8%/30-year option “feels” only $400/month more than 6%/15-year, but it costs $337,000 more in interest. Always compare the total interest row, which the calculator shows you upfront.
Frequently asked questions
What is loan amortization?
Amortization is the process of paying off a loan through fixed monthly payments, where each payment is split between interest and principal. Early payments are mostly interest; later payments are mostly principal. An amortization schedule is simply the table showing that split for every payment over the life of the loan.
How do I calculate my monthly loan payment?
Use the formula M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount, r the monthly rate, and n the number of payments. Or just enter your numbers in the calculator above — it also builds the full schedule and shows what extra payments save.
Why is so little of my early payments going to principal?
Because interest is charged on the full outstanding balance. On a large, long-term loan at a typical rate, the first years’ payments are dominated by interest charges. As the balance falls, the interest portion shrinks and more of each fixed payment attacks principal.
Does paying extra principal really shorten my loan?
Yes. Extra principal immediately reduces the balance that future interest is calculated on, so you pay less interest and finish sooner. Even $50–$100 extra per month can remove months or years from a loan. Confirm there’s no prepayment penalty first.
What’s the difference between amortization and depreciation?
Amortization (loans) is the scheduled paydown of debt through installments. Depreciation (accounting/tax) is the gradual write-down of an asset’s value over its useful life. They sound similar but describe opposite sides of the balance sheet.
Should I pay extra on my loan or invest the money instead?
Compare your loan’s interest rate to the return you reasonably expect from investing. Paying extra on a 7% loan is a guaranteed, risk-free 7% return — hard to beat. Paying extra on a 3% mortgage while your retirement accounts might earn more is less clear-cut. Most financial planners suggest: build an emergency fund first, capture any 401(k) employer match, then attack high-rate debt (above ~6–7%) before taxable investing.
Can I use this for a mortgage?
Yes — enter the home price minus down payment as the loan amount, your mortgage rate, and 15 or 30 years. Note this calculator covers principal and interest only; a full mortgage payment also includes property tax, homeowner’s insurance, PMI, and HOA, which our mortgage calculator handles.
Related calculators
- Credit Card Payoff Calculator — payoff timelines for revolving debt
- Mortgage Calculator — full PITI payment with taxes and insurance
- Auto Loan Calculator — car payments with trade-in and fees
Methodology reviewed September 2026. Uses the standard US fixed-rate amortization formula with monthly compounding. Educational content, not financial advice.