Loan Amortization Calculator
How to Use
- Select your Currency.
- Enter the loan amount.
- Enter the annual interest rate (in percent).
- Enter the loan term (in years).
- Optionally, enter any extra monthly payment to pay down your loan faster.
- Click the Calculate Amortization button.
- Your monthly payment and a detailed amortization schedule will be displayed below.
About Loan Amortization Calculator
What is Amortization? Amortization is the process of paying off a loan over time through regular payments. Each payment covers both interest and a portion of the principal.
Paying Off a Loan Over Time: Instead of paying the entire balance at once, the cost is spread over the life of the loan.
Spreading Costs: Your monthly payments are calculated based on an amortization schedule, which helps in spreading out the cost over the loan term.
Amortizing Startup Costs: Amortization can also apply to spreading large one-time costs over several periods.
Frequently Asked Questions (FAQ)
This means the loan’s monthly payments are calculated based on a 20-year amortization schedule, but the loan is due in 5 years. At the end of 5 years, a large balloon payment will be required to pay off the remaining balance.
In this scenario, the monthly payment is based on a 30-year amortization schedule (resulting in lower payments), but the loan itself is due in 5 years. A balloon payment will be required at the end of 5 years.
The EMI (Equated Monthly Installment) formula is:
EMI = [P × r × (1 + r)n] / [(1 + r)n − 1]
where P = Principal, r = monthly interest rate (annual rate divided by 12×100), and n = total number of monthly payments.
EMI = [P × r × (1 + r)n] / [(1 + r)n − 1]
where P = Principal, r = monthly interest rate (annual rate divided by 12×100), and n = total number of monthly payments.
First, calculate the EMI using the formula above. Then, for each month, compute the interest portion (current balance × monthly interest rate) and subtract that from the EMI to find the principal portion. Deduct the principal portion (plus any extra payment) from the current balance to get the new balance. Repeat until the balance is zero.
This calculator includes an option for extra monthly payments. By adding extra payments, you can reduce the overall interest and shorten the loan term. The extra payment is applied directly to the principal each month, which accelerates the payoff.
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