1. What is Loan Amortization?

Loan amortization is the process of paying off a debt over time through regular payments. This calculator helps determine the remaining balance on an existing loan based on your current payment amount, interest rate, and remaining term.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

Where:

• \( B \) — Remaining loan balance
• \( PMT \) — Monthly payment amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( remaining\_n \) — Remaining number of payments

Explanation: The formula calculates the present value of the remaining payments, accounting for both principal and interest components.

3. Importance of Loan Amortization

Details: Understanding your remaining loan balance helps with financial planning, refinancing decisions, and assessing your overall debt situation.

4. Using the Calculator

Tips: Enter your exact monthly payment, annual interest rate (as a percentage), and the number of payments remaining. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is my remaining balance different from my principal?
A: Early in a loan, payments are mostly interest. This calculator accounts for the interest portion in each payment.

Q2: Can I use this for any type of loan?
A: This works best for fixed-rate installment loans (mortgages, auto loans). It's not suitable for credit cards or variable-rate loans.

Q3: How accurate is this calculator?
A: It's mathematically precise for fixed-rate loans. For adjustable-rate loans, it's accurate only if rates don't change.

Q4: What if I make extra payments?
A: This calculator assumes consistent payments. For extra payments, you'd need a more advanced amortization schedule.

Q5: Why does my lender show a different balance?
A: Lenders may include fees or use slightly different calculation methods. Always verify with your lender.