# Amortization Calculator

 Loan Amount Loan Term years Interest Rate (APR)

## Monthly Pay:   \$263.79

 Total of 600 Loan Payments \$158,274.38 Total Interest \$58,274.38
Loan Amortization Graph
Payment Breakdown

While the Amortization Calculator can serve as a basic tool for most, if not all, amortization calculations, there are other calculators available on this website that are more specifically geared for common amortization calculations.

### What is Amortization?

There are two general definitions of amortization. The first is the systematic repayment of a loan over time. The second is used in the context of business accounting and is the act of spreading the cost of an expensive and long-lived item over many periods. The two are explained in more detail in the sections below.

### Paying Off a Loan Over Time

When a borrower takes out a mortgage, car loan, or personal loan, they usually make monthly payments to the lender; these are some of the most common uses of amortization. A part of the payment covers the interest due on the loan, and the remainder of the payment goes toward reducing the principal amount owed. Interest is computed on the current amount owed and thus will become progressively smaller as the principal decreases. It is possible to see this in action on the amortization table.

Credit cards, on the other hand, are generally not amortized. They are an example of revolving debt, where the outstanding balance can be carried month-to-month, and the amount repaid each month can be varied. Please use our Credit Card Calculator for more information or to do calculations involving credit cards, or our Credit Cards Payoff Calculator to schedule a financially feasible way to pay off multiple credit cards. Examples of other loans that aren't amortized include interest-only loans and balloon loans. The former includes an interest-only period of payment, and the latter has a large principal payment at loan maturity.

Amortization Schedule

An amortization schedule (sometimes called an amortization table) is a table detailing each periodic payment on an amortizing loan. Each calculation done by the calculator will also come with an annual and monthly amortization schedule above. Each repayment for an amortized loan will contain both an interest payment and payment towards the principal balance, which varies for each pay period. An amortization schedule helps indicate the specific amount that will be paid towards each, along with the interest and principal paid to date, and the remaining principal balance after each pay period.

Basic amortization schedules do not account for extra payments, but this doesn't mean that borrowers can't pay extra towards their loans. Also, amortization schedules generally do not consider fees. Generally, amortization schedules only work for fixed-rate loans and not adjustable-rate mortgages, variable rate loans, or lines of credit.

Certain businesses sometimes purchase expensive items that are used for long periods of time that are classified as investments. Items that are commonly amortized for the purpose of spreading costs include machinery, buildings, and equipment. From an accounting perspective, a sudden purchase of an expensive factory during a quarterly period can skew the financials, so its value is amortized over the expected life of the factory instead. Although it can technically be considered amortizing, this is usually referred to as the depreciation expense of an asset amortized over its expected lifetime. For more information about or to do calculations involving depreciation, please visit the Depreciation Calculator.

Amortization as a way of spreading business costs in accounting generally refers to intangible assets like a patent or copyright. Under Section 197 of U.S. law, the value of these assets can be deducted month-to-month or year-to-year. Just like with any other amortization, payment schedules can be forecasted by a calculated amortization schedule. The following are intangible assets that are often amortized:

1. Goodwill, which is the reputation of a business regarded as a quantifiable asset
2. Going-concern value, which is the value of a business as an ongoing entity
3. The workforce in place (current employees, including their experience, education, and training)
4. Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers
5. Patents, copyrights, formulas, processes, designs, patterns, know-hows, formats, or similar items
6. Customer-based intangibles, including customer bases and relationships with customers
7. Supplier-based intangibles, including the value of future purchases due to existing relationships with vendors
8. Licenses, permits, or other rights granted by governmental units or agencies (including issuances and renewals)
9. Covenants not to compete or non-compete agreements entered relating to acquisitions of interests in trades or businesses