1. What is Loan Amortization?

Loan amortization is the process of paying off a debt over time through regular payments. Each payment covers both interest and principal, with the interest portion decreasing and principal portion increasing over the life of the loan.

2. How Does the Calculator Work?

The calculator uses the standard loan amortization formula:

Where:

• \( PMT \) — Monthly payment amount
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in months)

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment amount that will completely pay off the loan by the end of the term.

3. Importance of Loan Calculation

Details: Understanding your loan payments helps with budgeting and financial planning. It shows how much interest you'll pay over the life of the loan and how different terms affect your payments.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate as a percentage, and loan term in either years or months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between interest rate and APR?
A: The interest rate is the cost of borrowing the principal, while APR includes additional fees and costs associated with the loan.

Q2: How can I pay less interest overall?
A: You can pay less interest by choosing a shorter loan term, making extra payments, or securing a lower interest rate.

Q3: Why does Florida have specific lending calculators?
A: Florida has unique laws regarding mortgages and loans that may affect terms and calculations.

Q4: What's an amortization schedule?
A: A table showing each payment's breakdown between principal and interest, and the remaining balance after each payment.

Q5: How does a larger down payment affect my loan?
A: A larger down payment reduces your principal amount, resulting in lower monthly payments and less total interest paid.