How this calculator works
Amortization spreads repayment over a fixed number of months. Interest is calculated on the opening balance; the payment first covers that interest and then reduces principal. As the balance falls, more of each payment goes towards principal. This calculator gives a summary rather than a month-by-month table.
Formula
Monthly interest I_k = B_(k-1) × r/12; principal repaid Q_k = A - I_k; closing balance B_k = B_(k-1) - Q_k. A = P × i / (1 - (1 + i)^(-N)), with i = r/12. At zero interest A = P/N.
Worked example
For $1,200 repaid over 12 months at 0%, each $100 payment reduces principal by $100. Total repayment is $1,200 and interest is $0. At 6%, a $10,000 balance over 24 months costs $636.95 in interest.
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Frequently asked questions
Does this show an amortization schedule?
It shows the fixed payment and loan totals. The formula explains the monthly balance recurrence, but a detailed schedule is not displayed.
Why does the principal portion increase?
With a positive fixed rate, a lower balance produces less interest. A level payment then leaves more money to reduce principal.
Can I add an extra payment?
No. This model has no extra-payment input and assumes only the level monthly payment, so a prepayment is outside the result.