Amortization Calculator

An amortization schedule shows where every payment goes: how much pays interest, how much pays down the balance, and what's left afterwards. Add an extra monthly payment to see how much sooner the loan is gone and how much interest you avoid.

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How it's calculated

Each month, interest is the balance times the monthly rate. The rest of the payment reduces the balance. Because the balance falls, the interest part shrinks every month and the principal part grows, even though the payment stays the same.

Extra payments come off the balance in full, which lowers every interest charge after them. That's why a small extra amount early in a long loan saves so much.

Interest = Balance × r Principal = Payment − Interest New balance = Balance − Principal

How to do it in Excel

Put the rate in B1, the term in years in B2 and the amount in B3. Then fill a table with the payment number in column A:

=PMT($B$1/12, $B$2*12, -$B$3): The fixed monthly payment.
=IPMT($B$1/12, A6, $B$2*12, -$B$3): Interest in payment number A6.
=PPMT($B$1/12, A6, $B$2*12, -$B$3): Principal in payment number A6. Fill both down for the whole schedule.