Loan Summary
Total Payment Breakdown
Loan Balance Over Time
Amortization Schedule
| Month | Payment | Principal | Interest | Balance |
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How to Use This Calculator
- Enter Loan Amount: Input the total amount of money you are borrowing.
- Enter Annual Interest Rate: Provide the yearly interest rate for the loan as a percentage (e.g., enter 6.5 for 6.5%).
- Enter Loan Term: Input the total number of years you have to repay the loan.
- Calculate & Review: Click “Calculate” to see your results, including:
- Your fixed monthly payment, total interest paid, and total principal.
- A pie chart visualizing the principal vs. interest breakdown of your total payments.
- A line chart showing how your loan balance decreases over time.
- A full amortization schedule detailing each month’s payment.
Beyond the Monthly Payment: A Real-World Guide to Understanding Your Loan
When most people take out a major loan, like a mortgage or for a new car, their focus is laser-sharp on one number: the monthly payment. It’s the number that determines if the loan “fits” into the budget. But as a financial advisor, I can tell you that focusing only on the monthly payment is like looking at one tree and missing the entire forest. The real story of your loan is told in its amortization schedule.
What is Amortization, Anyway?
Amortization is just a fancy word for the process of paying off a debt over time in regular installments. Each payment you make is split into two parts: one part goes to paying down the principal (the money you actually borrowed), and the other part goes to paying the interest (the lender’s profit).
The magic and the cruelty of amortization is how that split changes over time. In the early years of your loan, the vast majority of your payment goes toward interest. It can be disheartening to look at your statement after a year of payments and see your loan balance has barely budged. But as you continue to pay, a larger and larger portion of your payment chips away at the principal, and you start building equity faster. This calculator shows you that exact shift, month by month.
The Power of One Extra Payment
Here’s a tip I give all my clients: if you can, make one extra mortgage payment per year. You can do this by paying a little extra each month (e.g., divide your monthly payment by 12 and add that amount to each payment) or by making a lump-sum 13th payment each year. On a 30-year mortgage, this simple strategy can shave off 4-6 years from your loan term and save you tens of thousands of dollars in interest. Why? Because that extra payment is almost entirely principal, which stops future interest from accruing on that amount.
Interest Rate Isn’t Everything (But It’s a Lot)
A half-percent difference in an interest rate might not sound like much, but over the life of a long-term loan, it’s enormous. On a $300,000, 30-year mortgage, the difference between a 6.5% rate and a 6.0% rate is over $64,000 in total interest paid. That’s the cost of a luxury car! It highlights why shopping around for the best rate is one of the most impactful financial decisions you can make.
Term Length: The Trade-Off Between Monthly Cost and Total Cost
Choosing between a 15-year and a 30-year mortgage is a classic financial dilemma.
- A **30-year loan** will have a much lower monthly payment, making it more affordable and freeing up cash for other investments or expenses. However, you will pay significantly more in total interest.
- A **15-year loan** has a higher monthly payment, but you build equity much faster and the total interest paid is dramatically lower.
Conclusion: Take Control of Your Debt
Understanding your loan’s amortization schedule is the first step toward taking control of your debt. It transforms the loan from a mysterious monthly bill into a clear, predictable roadmap. By seeing how interest, principal, and time interact, you can make informed decisions—like whether to refinance, make extra payments, or choose a different loan term—that can change your financial future.