Amortization Calculator

Looking to understand your loan payments better? The Amortization Calculator at SchoolMyKids is your go-to tool for breaking down exactly how much you’ll pay each month when you borrow money, whether it’s for a home, car, or any other big purchase. This calculator helps you see not just your monthly payment but also how much you’ll pay in total over the life of your loan and how much of that goes to interest versus the amount you borrowed (the principal). 

What is an Amortization Calculator?

An Amortization Calculator helps you figure out how much you need to pay every month when you borrow money (like a loan or a mortgage) and how much you’ll pay in total over the life of the loan. It breaks down each payment into two parts: the money that goes towards paying back the loan itself (the principal) and the money that goes towards the interest (the cost of borrowing). 

Understanding Key Terms

Before using the calculator, let's understand the important terms: 

• Loan Amount (Principal): This is the total amount of money you borrow. For example, if you're buying a car worth $20,000, your loan amount might be $20,000 or less if you make a down payment. 
• Loan Period: This is how long you have, to repay the loan, measured in years. Common loan periods are 3 years, 5 years, 15 years, or 30 years. Longer periods mean smaller monthly payments, but more total interest paid. 
• Interest Rate (APR): APR stands for Annual Percentage Rate. This is the yearly cost of borrowing money, expressed as a percentage. If your APR is 6%, you pay 6% interest on your outstanding loan balance each year. 
• Principal: The part of your payment that directly lowers the remaining amount you owe on the loan. 
• Interest: The part of your payment paid to the lender as a fee for borrowing the money. 

How Do I Calculate Loan Amortization?

The amortization calculation uses a specific mathematical formula. Here's how it works: 

Monthly Payment Formula:

Where: 

• P = Loan Amount 

• r = Monthly Interest Rate (Annual Rate ÷ 12 ÷ 100) 

• n = Total Number of Payments (Years × 12) 

Example Calculation 

Suppose you borrow ₹1,00,000 for 3 years at an interest rate of 10% per year. 

• Loan Amount (P): ₹1,00,000 

• Loan Period: 3 years (so, n=36 months) 

• Interest Rate (APR): 10% per year (r=10%÷12÷100=0.00833) 

This gives you a monthly payment of about ₹3226.72. 

• Total of 36 Months Payments: ₹3226.72 × 36 = ₹116161.87 

• Total Interest: ₹116161.87 - ₹1,00,000 = ₹16161.87 

How to Use the Amortization Calculator?

Using our calculator is simple and straightforward: 

• Choose Your Currency: Select from Dollar ($), Rupee (₹), Pounds (£), or Euro (€). 

• Enter Loan Amount: Input the total amount you want to borrow 

• Set Loan Period: Enter the number of years you want to repay the loan. 

• Input Interest Rate: Enter the annual interest rate (APR) as a percentage. 

• Calculate: Click the calculate button to see your results. 

Understanding Your Results

After you calculate, you’ll see: 

• Your Monthly Payment: How much you need to pay every month. 

• Total of Payments: The total amount you will pay over the entire loan period. 

• Total Interest: The extra money you pay to the lender for borrowing. 

Why Use Our Amortization Calculator?

Our calculator helps you: 

• Make informed borrowing decisions 

• Understand the true cost of loans 

• Compare different loan options 

• Plan your financial future 

• Avoid surprises in loan payments 

• See how different interest rates affect your payments 

Use SMK's Amortization Calculator to see how your loan works, plan your finances and make smart decisions. Try different amounts, periods, and rates to see how your monthly payment changes.

Frequently Asked Questions

What is loan amortization?

Loan amortization is the process of paying off a loan through regular payments over time. Each payment covers both interest and principal.

Why does the interest part of my payment decrease over time?

As you pay off your loan, the amount you owe gets smaller. Since interest is charged on the remaining balance, your interest payments go down each month.

Can I use this calculator for any type of loan?

Yes! You can use it for personal loans, car loans, home loans, or any loan with regular monthly payments and a fixed interest rate.