Scope
Assumptions and limits
This calculator is a planning estimate, not a lender quote, approval, regulated APR disclosure or financial advice.
Results use the values you enter and the conventions described in the methodology below. After calculating, review the result-specific assumptions and warnings shown with the estimate.
Explore money and debt tools for related tasks in this collection.
01
How amortization works
For a positive periodic rate i and N payments, payment is P × i × (1 + i)N ÷ ((1 + i)N − 1). At zero interest it is simply principal divided by payments.
Each period adds interest to the opening balance, then applies scheduled principal and interest, extra payments and any separately displayed payment fee. The final payment is reduced to avoid a negative closing balance.
02
Extra payments and fees
An extra recurring payment reduces principal sooner, so later interest is calculated on a smaller balance. On the 100,000 example, an extra 200 per month projects payoff in 54 rather than 60 months and reduces estimated interest by about 3,133.09.
An upfront fee accrues interest only when you choose to finance it. Recurring fees remain separate cash costs rather than principal.
03
Rate and schedule limitations
The nominal annual rate is divided by 12, 26 or 52 for monthly, fortnightly or weekly payments. Lenders may use daily interest, different day-count conventions, insurance or regulated APR disclosures.
This general model does not include variable rates, balloon payments, interest-only periods or prepayment penalties.
FAQ
Frequently asked questions
What is an amortization schedule?
It lists each payment's interest, principal and remaining balance.
Do extra payments reduce the required payment?
This model keeps the scheduled payment unchanged and shortens payoff; lender treatment may differ.
Can I use it for a car or business loan?
Yes, when the loan follows the stated fixed-payment assumptions.
Is this an official APR calculation?
No. It uses a stated nominal-rate convention.
What happens at zero interest?
The principal is divided evenly across the selected number of payments.
Sources
Method references and scope
Method: results come from tested code using the documented method and assumptions shown on this page.
Review owner: Great Future Product Engineering.
Method and content last reviewed: . Next review due: .