Question 1

What is loan amortization?

Accepted Answer

Loan amortization is the process of paying off a loan through regular payments over time. Each payment is split between interest (cost of borrowing) and principal (reducing the loan balance). Early payments are mostly interest, while later payments are mostly principal.

Question 2

How is the monthly payment calculated?

Accepted Answer

The monthly payment uses the PMT formula: Payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly interest rate, and n is number of payments. This ensures each payment covers interest due plus some principal, fully paying off the loan by the end.

Question 3

Is this amortization calculator free?

Accepted Answer

Yes, this tool is completely free. No registration, no credit card, unlimited calculations. You can also download the amortization schedule as CSV or copy the Excel formulas to build your own spreadsheet.

Question 4

Why is more interest paid at the beginning of a loan?

Accepted Answer

Interest is calculated on the remaining balance. At the start, you owe the full amount, so interest is highest. As you pay down principal, the balance decreases, so less interest accrues. This is why extra payments early in the loan save the most money.

Question 5

How can I pay off my loan faster?

Accepted Answer

Make extra payments toward principal. Even small additional amounts can significantly reduce total interest and loan term. Use our "Extra Payment Simulator" to see the impact. Bi-weekly payments (26/year instead of 12) also help pay off faster.

Question 6

What's the difference between APR and interest rate?

Accepted Answer

The interest rate is just the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus other fees (origination, points, closing costs). APR gives a more complete picture of the loan's true cost. This calculator uses the nominal interest rate.

Question 7

Can I use this for mortgages?

Accepted Answer

Yes! This calculator works for any amortizing loan: mortgages, auto loans, personal loans, student loans. Just enter your loan amount, interest rate, and term. For mortgages, typical terms are 15 or 30 years.

Question 8

How do I calculate amortization in Excel?

Accepted Answer

Use these functions: PMT(rate/12, months, -principal) for monthly payment, IPMT(rate/12, period, months, -principal) for interest portion, PPMT(...) for principal portion. Our calculator provides ready-to-use formulas you can copy directly to Excel.

Question 9

What happens if I make bi-weekly payments?

Accepted Answer

Bi-weekly payments (every 2 weeks) mean 26 half-payments per year, equivalent to 13 monthly payments instead of 12. This extra payment goes to principal, reducing your loan term by about 4-5 years on a 30-year mortgage and saving thousands in interest.

Question 10

Can I download the amortization schedule?

Accepted Answer

Yes! Click the "Download CSV" button to export the complete amortization schedule. You can open this file in Excel, Google Sheets, or any spreadsheet application to analyze or customize it further.

Question 11

Why doesn't my final payment equal the others?

Accepted Answer

Due to rounding, the final payment is often slightly different to bring the balance to exactly zero. This is normal and typically a difference of only a few cents or dollars. The calculator handles this automatically.

Question 12

How is this different from ElyxAI?

Accepted Answer

This free calculator handles standard amortization. ElyxAI is a powerful AI agent in Excel that can create custom loan calculators, handle complex scenarios (variable rates, balloon payments), build financial dashboards, and automate any Excel workflow. Try ElyxAI free for 7 days!

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