What an amortization schedule shows
A fixed-rate loan has the same payment every month, but what that payment buys you changes over time. In month one, most of it covers interest on the full balance. As the balance shrinks, less interest accrues and more of each payment goes to principal. The schedule lays this out month by month (or year by year) so you can see the crossover point and the remaining balance at any date.
This matters when you're deciding whether to refinance, how much equity you'll have in five years, or what a lump-sum payment would actually do.
The effect of extra payments
Any amount you pay beyond the scheduled payment goes straight to principal (make sure your lender applies it that way). Because interest is charged on the remaining balance, a smaller balance means every future payment contains less interest — the savings compound.
On a $300,000, 30-year loan at 6.5%, an extra $200 a month pays the loan off about six years early and saves roughly $80,000 in interest. Enter your own figures above to see your number; the calculator shows both interest saved and months cut.
Reading the yearly view
The default table rolls payments up by year, which is easier to scan. Switch to monthly view when you need the balance as of a specific month — for example, to compare a payoff quote from your lender, or to see how much principal you'll have paid before a planned sale.
Interest and principal each month
Interest = Balance × (r ÷ 12) · Principal = Payment − Interest
- r = annual interest rate
- Balance = remaining principal at start of month
- Payment = fixed amount from the amortization formula plus any extra
Frequently asked questions
+Is it better to pay extra monthly or make one lump sum a year?
Dollar for dollar, earlier is better because interest stops accruing on that amount sooner. Twelve monthly payments of $200 save slightly more than one $2,400 payment at year-end. But the difference is small; consistency matters more than timing.
+Do extra payments lower my monthly payment?
On most fixed-rate loans, no — the payment stays the same and the loan ends early. Some lenders offer a "recast" after a large lump sum, which re-amortizes the remaining balance over the remaining term and lowers the payment. Ask; there's usually a small fee.
+Does this work for car loans and personal loans?
Yes. Any fixed-rate, fully amortizing loan follows the same math. Enter the term in years (a 60-month auto loan is 5 years).
+Why is so little going to principal at the start?
Because interest is charged on the whole balance, and at the start the balance is at its largest. On a 30-year mortgage it typically takes 15–20 years before the principal portion exceeds the interest portion of the payment.