Loan Payment and Amortization Calculator

Both directions, and why the second one is the dangerous one

Lenders sell in payments. "What were you hoping to pay a month?" is the first question at a car dealership, and it is a good question for them: a payment can be made to fit almost any price by stretching the term.

Eighty-four months makes a car you cannot afford look like one you can — at the cost of years of interest, and a long stretch of owing more than the thing is worth.

So the reverse mode here answers exactly what it is asked — the most you could borrow at that payment, rate and term — and shows you the interest beside it. Run it twice, at the term the lender offers and at a shorter one, and the difference between the two totals is what the longer term costs.

Why so much of an early payment is interest

Interest is charged on what you owe at the start of each period, not spread evenly across the loan. Early on you owe nearly the whole balance, so nearly the whole payment goes to interest. As the balance falls, the interest charge falls with it, and more of the same fixed payment lands on principal.

That is not a trick, and there is no rule that pays interest "first". It is the arithmetic of a level payment against a falling balance. The schedule above shows the split for every payment, which is the clearest way to see it.

What an extra payment actually does

Because interest follows the balance, anything extra reduces the interest charged in every period that follows. It is the same reason early extra payments are worth more than late ones: they have more periods left to work on.

Put an amount in the extra field and the tool shows how much sooner the loan clears and how much interest that saves. Two things worth checking with your lender before counting on it: that extra money is applied to principal rather than held as a prepayment of next month's bill, and that there is no prepayment penalty.

The last payment is never quite the same

A payment rounded to the cent does not divide a loan exactly, so the final payment picks up whatever is left — usually a few cents or a few dollars, and much less than a full payment when extra money has been going in. Lenders do the same thing, which is why your payoff quote rarely matches the payment you have been making.

Paying every two weeks

The calculator treats the rate as the annual rate divided by the number of payments in a year, which is how consumer lenders quote a payment. Paying every two weeks for the same term means the balance falls two weeks sooner each time and slightly less interest is charged — though you also pay a little more in a year, because twenty-six half-payments is thirteen monthly ones rather than twelve.

If you are being offered a "biweekly payment program" by a servicer, ask two things: whether the money is applied when it arrives or held until a full monthly payment is assembled, and what the enrollment fee is. Sending one extra payment a year yourself usually costs nothing and does the same thing.

What this doesn't do

Principal and interest only. A mortgage payment usually carries property tax and insurance as well, and often mortgage insurance; a car payment does not, but the price the loan is written against may include tax, title and dealer fees you could have paid up front.

It also assumes a fixed rate for the whole term, no fees rolled into the balance, and interest that accrues on the balance in even periods — not a daily-accrual loan where paying early or late shifts the interest slightly, and not a precomputed interest contract where the total is fixed at signing and paying early saves less than you would expect. The quoted rate is also not the APR, which folds in fees; for comparing two offers, compare APRs.

If the question is which debt to attack first rather than what one costs, the payoff order calculator is the one you want, and for a mortgage you already have, the recast and refinance comparison.

Printing it

Print, or save as PDF produces the schedule as a document rather than a screenshot of the form: the terms at the top, the payment, total interest, total paid and payoff date, then every payment with its split and the balance left. The calculator's own controls are stripped out.

Choose Save as PDF as the destination in the print dialog. Nothing is uploaded and nothing is stored — the numbers stay in your browser.