Create a Loan Amortization Schedule

Create a loan amortization schedule by entering the loan amount, annual interest rate, and term to calculate the monthly payment and total interest. This calculator gives the fixed-payment figures you need to build a month-by-month schedule; the schedule itself can be made by applying each payment first to interest, then to principal.

Formula

The monthly payment is the amount that, when paid for the full term at a constant monthly interest rate, repays the starting balance. The formula is:

PMT = round(P × r / (1 − (1 + r)−n), 2)

• P is the original principal, in dollars.
• APR is the annual percentage rate entered as a percent per year.
• r is the monthly rate as a decimal: APR / 1200.
• n is the number of monthly payments: years × 12.
• PMT is the monthly payment, rounded to the nearest cent.

Total interest is estimated as PMT × n − P. Because the payment is rounded to cents before the total is calculated, this figure reflects the rounded payment across all scheduled months. An actual final payment may differ slightly if the lender adjusts it to bring the balance precisely to zero.

Worked Example

Using the calculator’s default inputs—$20,000 principal, 8% APR, and a five-year term—there are 5 × 12 = 60 monthly payments. The monthly rate is 8 / 1200 = 0.0066667.

Substitute those values into the payment formula:

PMT = round(20000 × 0.0066667 / (1 − (1 + 0.0066667)−60), 2)

The monthly payment is $405.53. Total scheduled payments are $405.53 × 60 = $24,331.80, so estimated total interest is $24,331.80 − $20,000 = $4,331.80.

Assumptions

• The interest rate stays fixed throughout the loan term.
• Payments are made monthly at the end of each period, with the first payment one month after borrowing.
• Interest is compounded monthly using the APR divided by 12.
• The calculation excludes fees, taxes, insurance, PMI, and escrow because these are not inputs.

How to Build the Month-by-Month Schedule

The calculator’s payment is the starting point for an amortization table. Each row represents one payment period. For a standard fixed-rate loan, calculate that period’s interest from the balance at the start of the month, subtract it from the payment to find the principal paid, and then subtract that principal from the balance.

1. Start with the opening balance: the original loan amount for month one.
2. Calculate interest: opening balance × monthly rate.
3. Calculate principal paid: monthly payment − interest for that month.
4. Calculate closing balance: opening balance − principal paid.
5. Use the closing balance as the next month’s opening balance and repeat.

For the example, month one interest is approximately $20,000 × 0.0066667 = $133.33. From the $405.53 payment, about $272.20 goes to principal, leaving an estimated $19,727.80 balance. In the next month, interest is calculated on that smaller balance, so a slightly larger share of the same payment goes to principal. This gradual shift is the defining pattern of a level-payment amortization schedule.

How to Read the Results

The monthly payment is the scheduled principal-and-interest payment under the formula’s assumptions, not necessarily the complete amount due on a bill. A bill may also include items such as insurance or taxes, depending on the loan arrangement. Total interest is the estimated amount paid above the original principal over the full schedule; it is not the total cost of every charge connected with borrowing.

In an amortization table, useful columns usually include payment number, opening balance, payment, interest, principal, and closing balance. Early rows often show more interest because interest is calculated on a larger outstanding balance. Later rows show less interest and more principal when the payment and rate remain unchanged.

Common Errors and Limits

• Entering APR as a decimal: Enter 8 for 8%, not 0.08. The formula converts the percentage to a monthly decimal by dividing by 1,200.
• Mixing periods: The calculation assumes monthly payments and a term in years, converted to months. A schedule with weekly or biweekly payments needs a different timing model.
• Rounding every intermediate step: Rounding the payment to cents is appropriate for the displayed estimate, but repeatedly rounding calculated interest and balances can produce small discrepancies in a long table. Keep extra precision internally if constructing a spreadsheet.
• Assuming every loan has level payments: Variable rates, interest-only periods, balloon payments, skipped-payment arrangements, or extra principal payments change the schedule and are not modelled here.

The total-interest result uses the rounded monthly payment for every month. Spreadsheet schedules may show a small residual balance from rounding, so the last payment is sometimes adjusted. For a payment that does not fully amortize the principal under the stated assumptions, the formula may not describe the actual contract; compare the calculation with the lender’s repayment terms.

When to Use an Amortization Schedule

A schedule is useful for understanding how a fixed payment is divided over time, checking the path of the outstanding balance, or seeing the estimated interest over the full term. It can also help explain why paying down principal changes future interest: if the balance is reduced earlier, subsequent interest calculations on that balance are lower, though the exact effect depends on how the lender applies additional payments and whether the contract permits them as expected.

Use the actual principal, APR, and term shown in the relevant loan documents when you need a closer estimate. The rate entered here is a numerical input, not a market-rate estimate. Ask the lender for the applicable figures and the way payments are applied, especially if the loan has fees, a changing rate, or a nonstandard payment schedule.

Frequently Asked Questions

What is a loan amortization schedule?
An amortization schedule is a table showing each scheduled payment’s interest and principal portions, along with the remaining loan balance after each payment.

How do I calculate interest for each month?
Multiply the balance at the beginning of the month by the monthly rate, calculated here as APR divided by 1,200. The payment minus that interest is the principal portion under a standard level-payment schedule.

Why does the principal portion increase over time?
With a fixed payment and rate, each principal payment reduces the balance. Interest is then calculated on a smaller amount in later periods, leaving more of the same payment to reduce principal.

Does this calculator include extra payments or fees?
No. It models a fixed rate, regular monthly payments, and the entered loan amount and term. Extra payments, fees, and other charges require additional inputs or a different schedule.

Why might my lender’s schedule differ by a few cents?
Payment rounding, the exact payment dates, the lender’s interest calculation method, and a final-payment adjustment can create small differences. Use the lender’s disclosure for contract-specific figures.

This result is an estimate, and the lender’s disclosure gives the exact figures.

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in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2