What is amortization?
Amortization is the process of paying off a loan with equal regular payments. Each payment covers the interest charged that month, and whatever is left reduces the loan balance. Because interest is calculated on the remaining balance, the interest portion is largest at the start and shrinks over time while the principal portion grows.
How to read the schedule
The table shows, for each year, the total interest paid, the total principal repaid and the balance still owed at the end of the year. In the early years you will notice that most of your payments go to interest; the balance only starts to fall quickly in the second half of the loan.
Why it matters
- It shows the true cost of a loan beyond the monthly payment.
- It explains why extra payments early in the loan save the most interest.
- It helps you decide whether a shorter term or a refinance makes sense.
The calculator assumes a fixed rate and equal monthly payments, as in most mortgages and personal loans.
Frequently asked questions
What does the schedule show?
For every year of the loan: the interest paid, the principal repaid and the remaining balance.
Why is so much of my early payment interest?
Interest is charged on the full outstanding balance, which is highest at the beginning.
Does it work for variable-rate loans?
No. It assumes the rate stays fixed for the whole term.