1. What is a Loan Amortization Table?

A loan amortization table shows the breakdown of each payment into principal and interest over the life of a loan. It helps borrowers understand how much of each payment goes toward reducing the principal versus paying interest.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

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

Explanation: The formula calculates the fixed payment amount required to fully repay a loan over its term, accounting for compound interest.

3. Understanding the Results

Details: The calculator provides the monthly payment amount, total interest paid over the life of the loan, and the total cost (principal + interest). Early payments consist mostly of interest, while later payments apply more toward principal.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate as a percentage (e.g., 5.25 for 5.25%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go toward interest?
A: Interest is calculated on the outstanding balance, which is highest at the beginning of the loan. This is normal for amortizing loans.

Q2: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter loan term, or secure a lower interest rate.

Q3: What's the difference between APR and interest rate?
A: APR includes both the interest rate and any additional loan fees, giving a more complete cost picture.

Q4: Does this work for mortgages, car loans, and personal loans?
A: Yes, this calculator works for any fixed-rate, fully amortizing loan.

Q5: What about adjustable-rate loans?
A: This calculator assumes a fixed rate. For adjustable-rate loans, payments would change when the rate adjusts.