Payment Schedule (Amortization) Calculator

Loan Amount
Interest Rate (%)
% per year
Loan Terms
Monthly Payment  =  3263.55USD
Total Repayment  =  78325.19USD
Total Interest Cost  =  3325.19USD

Payment schedule calculator is an online personal finance assessment tool to determine how the principal and interest are decreasing over time for each payment that make against the mortgage, auto, personal or business loan. Loan amount, interest rate and maturity period are the key terms employed in this calculator to reproduce the detailed information that will let know the series of time frames on which are required to make the monthly payments. It is necessary to follow the next steps:

  1. Enter the loan amount, interest rate and loan terms in the box. These values must be positive real numbers while the loan terms must be positive integer;
  2. Press the "CALCULATE" button to make the computation;
  3. Payment schedule calculator will give the monthly payment, total repayment and total interest cost.
Input : Three positive real numbers. Value which represents the loan terms must be positive integer;
Output : Three positive real numbers.

Loan Payment Formula:
The fixed monthly payment for a loan amount for $n$ months and a monthly interest rate $r$ is determined by the formula
$$\mbox{Loan payment}= \mbox{Loan amount}\times \frac{r(1+r)^n}{(1+r)^n-1}$$

What is Loan Amortization?

Loan amortization also known as payment schedule gives information how loan amount get decreased over a period of time by regular monthly or term payments. When used in the context of a home purchase or personal loan, or auto loan, etc, a loan amortization schedule is a process by which the loan principal and the interest on the principal decreases over the life of the loan. Payment schedule explains how much percentage of each monthly payment goes to reduce both principal and interest for the entire tenure. Loan payment consists of two parts:

  • interest;
  • repayment of the principal.
The part of interest is higher at the beginning of the loan term, but it declines as the loan balance decreases. In order to obtain that this amortization calculator not only assists us to understand how each monthly payment affects the loan and also helps us to find out best mortgage deal available in the market by comparing various deals available in the market.

How to Calculate Monthly Payment & Total Interest?

Loan amount or principal is the amount of money that a bank or financial institution lends. Annual rate is the interest rate that is given by banks or financial institution. Loan term is the time period for the loan if we make the required payments each month. The fixed monthly payment for a loan amount for $n$ months and a monthly interest rate $c$ is determined by the formula

$$\mbox{Loan payment}= \mbox{Loan amount}\times \frac{r(1+r)^n}{(1+r)^n-1}$$
For example, for loan amount of $\$75,000$, interest rate of $4.2\%$ (this divided by $12$ equals $r=0.0035$) and loan terms of $2$ years ($n=2\times 12=24$ months), we get
$$\mbox{Loan payment}=75,000\frac{0.0035(1+0.0035)^{24}}{(1+0.0035)^{24}-1}=\$3263.55$$
So, the monthly payment is $\$3263.55$. The total repayments, is $$\$3263.55\times 24=\$78,325.2$$ The total interested cost is
$$\mbox{Total Iterested Cost}=\mbox{Total Repayments}-\mbox{Loan Amount}=\$3,325.2$$
An amortization table shows how much of each payment is going to principal and how much is going to interest, and how much of the original loan amount is left over after the payment. For any other loan amount, interest rate, and loan terms just supply three positive real numbers and click on the CALCULATE button.

Real World Problems Using Payment Schedule

Payment schedule calculator is very useful, for instance, we can compute the amount of money needed to devote for loan repayment over a payment period. This calculator also gives us the total amount needed to pay back during the whole loan term.

Payment Schedule Practice Problems

Practice Problem 1 :
If Michael borrowed $\$40,000$ to buy a new car with a $6$ year loan at an interest rate of $3.25\%$, find Michel's monthly payments.

Practice Problem 2 :
A loan of $\$10,000$ at an interest rate of $10.5\%$ is to be amortized by $30$ monthly payments. Find the monthly payment and construct an amortization schedule.

The Payment schedule calculator, example calculation, real world problems and practice problems would be very useful for grade school students (K-12 education) to understand the concept of financial analysis.