Understanding the amortization calculator
Amortization is the process of paying a loan down to zero with equal periodic payments. Each payment first covers the interest accrued on the current balance; whatever remains reduces the principal. Because the balance shrinks every month, the interest portion shrinks with it, and the principal portion grows the payment stays the same while its composition steadily flips.
Adding even a small extra amount to each payment attacks the balance directly, which reduces every future month's interest charge. On a typical 30-year loan, an extra payment of a few percent of the monthly amount can cut years off the payoff date. Use the extra-payment field above to see the exact effect on your own numbers.
Results are estimates for education only and are not financial advice.