With the extra payment(s), the loan will be paid off in 27 years and 5 months, and $71,497 interest will be saved.
Total of 329 monthly payments
$1,093,647.84
Total interest
$626,047.84
Total extra payment(s)
$32,400.00
Interest to be saved due to the extra payment(s)
$71,496.65
Loan payoff date
Jan. 2052
Amortization schedule
Month
Date
Interest
Principal
Ending Balance
1
8/2024
$2,916.67
$409.85
$499,590.15
2
9/2024
$2,914.28
$412.24
$499,177.92
3
10/2024
$2,911.87
$414.64
$498,763.28
4
11/2024
$2,909.45
$417.06
$498,346.22
5
12/2024
$2,907.02
$419.49
$497,926.72
6
1/2025
$2,904.57
$421.94
$497,504.78
7
2/2025
$2,902.11
$424.40
$497,080.38
8
3/2025
$2,899.64
$426.88
$496,653.51
9
4/2025
$2,897.15
$429.37
$496,224.14
10
5/2025
$2,894.64
$431.87
$495,792.27
11
6/2025
$2,892.12
$434.39
$495,357.88
12
7/2025
$2,889.59
$436.92
$494,920.95
End of year 1
13
8/2025
$2,887.04
$1,639.47
$493,281.48
14
9/2025
$2,877.48
$449.04
$492,832.44
15
10/2025
$2,874.86
$451.66
$492,380.78
16
11/2025
$2,872.22
$454.29
$491,926.49
17
12/2025
$2,869.57
$456.94
$491,469.55
18
1/2026
$2,866.91
$459.61
$491,009.94
19
2/2026
$2,864.22
$462.29
$490,547.66
20
3/2026
$2,861.53
$464.98
$490,082.67
21
4/2026
$2,858.82
$467.70
$489,614.98
22
5/2026
$2,856.09
$470.43
$489,144.55
23
6/2026
$2,853.34
$473.17
$488,671.38
24
7/2026
$2,850.58
$475.93
$488,195.45
End of year 2
25
8/2026
$2,847.81
$1,678.71
$486,516.75
26
9/2026
$2,838.01
$488.50
$486,028.25
27
10/2026
$2,835.16
$491.35
$485,536.90
28
11/2026
$2,832.30
$494.21
$485,042.69
29
12/2026
$2,829.42
$497.10
$484,545.59
30
1/2027
$2,826.52
$500.00
$484,045.59
31
2/2027
$2,823.60
$502.91
$483,542.68
32
3/2027
$2,820.67
$505.85
$483,036.83
33
4/2027
$2,817.71
$508.80
$482,528.03
34
5/2027
$2,814.75
$511.77
$482,016.27
35
6/2027
$2,811.76
$514.75
$481,501.52
36
7/2027
$2,808.76
$517.75
$480,983.76
End of year 3
37
8/2027
$2,805.74
$1,720.77
$479,262.99
38
9/2027
$2,795.70
$530.81
$478,732.18
39
10/2027
$2,792.60
$533.91
$478,198.27
40
11/2027
$2,789.49
$537.02
$477,661.25
41
12/2027
$2,786.36
$540.16
$477,121.09
42
1/2028
$2,783.21
$543.31
$476,577.79
43
2/2028
$2,780.04
$546.48
$476,031.31
44
3/2028
$2,776.85
$549.66
$475,481.65
45
4/2028
$2,773.64
$552.87
$474,928.78
46
5/2028
$2,770.42
$556.09
$474,372.68
47
6/2028
$2,767.17
$559.34
$473,813.35
48
7/2028
$2,763.91
$562.60
$473,250.74
End of year 4
49
8/2028
$2,760.63
$1,765.88
$471,484.86
50
9/2028
$2,750.33
$576.18
$470,908.68
51
10/2028
$2,746.97
$579.55
$470,329.13
52
11/2028
$2,743.59
$582.93
$469,746.21
53
12/2028
$2,740.19
$586.33
$469,159.88
54
1/2029
$2,736.77
$589.75
$468,570.13
55
2/2029
$2,733.33
$593.19
$467,976.95
56
3/2029
$2,729.87
$596.65
$467,380.30
57
4/2029
$2,726.39
$600.13
$466,780.17
58
5/2029
$2,722.88
$603.63
$466,176.54
59
6/2029
$2,719.36
$607.15
$465,569.40
60
7/2029
$2,715.82
$610.69
$464,958.70
End of year 5
61
8/2029
$2,712.26
$1,814.25
$463,144.45
62
9/2029
$2,701.68
$624.84
$462,519.61
63
10/2029
$2,698.03
$628.48
$461,891.13
64
11/2029
$2,694.36
$632.15
$461,258.99
65
12/2029
$2,690.68
$635.84
$460,623.15
66
1/2030
$2,686.97
$639.54
$459,983.61
67
2/2030
$2,683.24
$643.27
$459,340.33
68
3/2030
$2,679.49
$647.03
$458,693.30
69
4/2030
$2,675.71
$650.80
$458,042.50
70
5/2030
$2,671.91
$654.60
$457,387.90
71
6/2030
$2,668.10
$658.42
$456,729.49
72
7/2030
$2,664.26
$662.26
$456,067.23
End of year 6
73
8/2030
$2,660.39
$1,866.12
$454,201.11
74
9/2030
$2,649.51
$677.01
$453,524.11
75
10/2030
$2,645.56
$680.96
$452,843.15
76
11/2030
$2,641.59
$684.93
$452,158.22
77
12/2030
$2,637.59
$688.92
$451,469.30
78
1/2031
$2,633.57
$692.94
$450,776.36
79
2/2031
$2,629.53
$696.98
$450,079.37
80
3/2031
$2,625.46
$701.05
$449,378.32
81
4/2031
$2,621.37
$705.14
$448,673.19
82
5/2031
$2,617.26
$709.25
$447,963.93
83
6/2031
$2,613.12
$713.39
$447,250.54
84
7/2031
$2,608.96
$717.55
$446,532.99
End of year 7
85
8/2031
$2,604.78
$1,921.74
$444,611.26
86
9/2031
$2,593.57
$732.95
$443,878.31
87
10/2031
$2,589.29
$737.22
$443,141.09
88
11/2031
$2,584.99
$741.52
$442,399.56
89
12/2031
$2,580.66
$745.85
$441,653.72
90
1/2032
$2,576.31
$750.20
$440,903.52
91
2/2032
$2,571.94
$754.58
$440,148.94
92
3/2032
$2,567.54
$758.98
$439,389.96
93
4/2032
$2,563.11
$763.40
$438,626.56
94
5/2032
$2,558.65
$767.86
$437,858.70
95
6/2032
$2,554.18
$772.34
$437,086.37
96
7/2032
$2,549.67
$776.84
$436,309.52
End of year 8
97
8/2032
$2,545.14
$1,981.37
$434,328.15
98
9/2032
$2,533.58
$792.93
$433,535.22
99
10/2032
$2,528.96
$797.56
$432,737.66
100
11/2032
$2,524.30
$802.21
$431,935.45
101
12/2032
$2,519.62
$806.89
$431,128.56
102
1/2033
$2,514.92
$811.60
$430,316.97
103
2/2033
$2,510.18
$816.33
$429,500.64
104
3/2033
$2,505.42
$821.09
$428,679.55
105
4/2033
$2,500.63
$825.88
$427,853.66
106
5/2033
$2,495.81
$830.70
$427,022.96
107
6/2033
$2,490.97
$835.55
$426,187.42
108
7/2033
$2,486.09
$840.42
$425,347.00
End of year 9
109
8/2033
$2,481.19
$2,045.32
$423,301.68
110
9/2033
$2,469.26
$857.25
$422,444.43
111
10/2033
$2,464.26
$862.25
$421,582.17
112
11/2033
$2,459.23
$867.28
$420,714.89
113
12/2033
$2,454.17
$872.34
$419,842.55
114
1/2034
$2,449.08
$877.43
$418,965.12
115
2/2034
$2,443.96
$882.55
$418,082.57
116
3/2034
$2,438.81
$887.70
$417,194.87
117
4/2034
$2,433.64
$892.88
$416,301.99
118
5/2034
$2,428.43
$898.08
$415,403.91
119
6/2034
$2,423.19
$903.32
$414,500.59
120
7/2034
$2,417.92
$908.59
$413,591.99
End of year 10
121
8/2034
$2,412.62
$2,113.89
$411,478.10
122
9/2034
$2,400.29
$926.22
$410,551.88
123
10/2034
$2,394.89
$931.63
$409,620.25
124
11/2034
$2,389.45
$937.06
$408,683.19
125
12/2034
$2,383.99
$942.53
$407,740.66
126
1/2035
$2,378.49
$948.03
$406,792.64
127
2/2035
$2,372.96
$953.56
$405,839.08
128
3/2035
$2,367.39
$959.12
$404,879.96
129
4/2035
$2,361.80
$964.71
$403,915.25
130
5/2035
$2,356.17
$970.34
$402,944.91
131
6/2035
$2,350.51
$976.00
$401,968.91
132
7/2035
$2,344.82
$981.69
$400,987.22
End of year 11
133
8/2035
$2,339.09
$2,187.42
$398,799.80
134
9/2035
$2,326.33
$1,000.18
$397,799.62
135
10/2035
$2,320.50
$1,006.01
$396,793.60
136
11/2035
$2,314.63
$1,011.88
$395,781.72
137
12/2035
$2,308.73
$1,017.79
$394,763.93
138
1/2036
$2,302.79
$1,023.72
$393,740.21
139
2/2036
$2,296.82
$1,029.69
$392,710.52
140
3/2036
$2,290.81
$1,035.70
$391,674.81
141
4/2036
$2,284.77
$1,041.74
$390,633.07
142
5/2036
$2,278.69
$1,047.82
$389,585.25
143
6/2036
$2,272.58
$1,053.93
$388,531.32
144
7/2036
$2,266.43
$1,060.08
$387,471.24
End of year 12
145
8/2036
$2,260.25
$2,266.26
$385,204.98
146
9/2036
$2,247.03
$1,079.48
$384,125.49
147
10/2036
$2,240.73
$1,085.78
$383,039.71
148
11/2036
$2,234.40
$1,092.11
$381,947.60
149
12/2036
$2,228.03
$1,098.48
$380,849.11
150
1/2037
$2,221.62
$1,104.89
$379,744.22
151
2/2037
$2,215.17
$1,111.34
$378,632.88
152
3/2037
$2,208.69
$1,117.82
$377,515.06
153
4/2037
$2,202.17
$1,124.34
$376,390.72
154
5/2037
$2,195.61
$1,130.90
$375,259.82
155
6/2037
$2,189.02
$1,137.50
$374,122.32
156
7/2037
$2,182.38
$1,144.13
$372,978.19
End of year 13
157
8/2037
$2,175.71
$2,350.81
$370,627.39
158
9/2037
$2,161.99
$1,164.52
$369,462.87
159
10/2037
$2,155.20
$1,171.31
$368,291.55
160
11/2037
$2,148.37
$1,178.15
$367,113.41
161
12/2037
$2,141.49
$1,185.02
$365,928.39
162
1/2038
$2,134.58
$1,191.93
$364,736.46
163
2/2038
$2,127.63
$1,198.88
$363,537.58
164
3/2038
$2,120.64
$1,205.88
$362,331.70
165
4/2038
$2,113.60
$1,212.91
$361,118.79
166
5/2038
$2,106.53
$1,219.99
$359,898.80
167
6/2038
$2,099.41
$1,227.10
$358,671.70
168
7/2038
$2,092.25
$1,234.26
$357,437.44
End of year 14
169
8/2038
$2,085.05
$2,441.46
$354,995.98
170
9/2038
$2,070.81
$1,255.70
$353,740.28
171
10/2038
$2,063.48
$1,263.03
$352,477.25
172
11/2038
$2,056.12
$1,270.40
$351,206.85
173
12/2038
$2,048.71
$1,277.81
$349,929.05
174
1/2039
$2,041.25
$1,285.26
$348,643.79
175
2/2039
$2,033.76
$1,292.76
$347,351.03
176
3/2039
$2,026.21
$1,300.30
$346,050.73
177
4/2039
$2,018.63
$1,307.88
$344,742.85
178
5/2039
$2,011.00
$1,315.51
$343,427.34
179
6/2039
$2,003.33
$1,323.19
$342,104.15
180
7/2039
$1,995.61
$1,330.90
$340,773.25
End of year 15
181
8/2039
$1,987.84
$2,538.67
$338,234.58
182
9/2039
$1,973.04
$1,353.48
$336,881.10
183
10/2039
$1,965.14
$1,361.37
$335,519.73
184
11/2039
$1,957.20
$1,369.31
$334,150.41
185
12/2039
$1,949.21
$1,377.30
$332,773.11
186
1/2040
$1,941.18
$1,385.34
$331,387.78
187
2/2040
$1,933.10
$1,393.42
$329,994.36
188
3/2040
$1,924.97
$1,401.55
$328,592.81
189
4/2040
$1,916.79
$1,409.72
$327,183.09
190
5/2040
$1,908.57
$1,417.94
$325,765.15
191
6/2040
$1,900.30
$1,426.22
$324,338.93
192
7/2040
$1,891.98
$1,434.54
$322,904.40
End of year 16
193
8/2040
$1,883.61
$2,642.90
$320,261.49
194
9/2040
$1,868.19
$1,458.32
$318,803.17
195
10/2040
$1,859.69
$1,466.83
$317,336.35
196
11/2040
$1,851.13
$1,475.38
$315,860.96
197
12/2040
$1,842.52
$1,483.99
$314,376.97
198
1/2041
$1,833.87
$1,492.65
$312,884.33
199
2/2041
$1,825.16
$1,501.35
$311,382.97
200
3/2041
$1,816.40
$1,510.11
$309,872.86
201
4/2041
$1,807.59
$1,518.92
$308,353.94
202
5/2041
$1,798.73
$1,527.78
$306,826.16
203
6/2041
$1,789.82
$1,536.69
$305,289.46
204
7/2041
$1,780.86
$1,545.66
$303,743.81
End of year 17
205
8/2041
$1,771.84
$2,754.67
$300,989.13
206
9/2041
$1,755.77
$1,570.74
$299,418.39
207
10/2041
$1,746.61
$1,579.91
$297,838.49
208
11/2041
$1,737.39
$1,589.12
$296,249.36
209
12/2041
$1,728.12
$1,598.39
$294,650.97
210
1/2042
$1,718.80
$1,607.72
$293,043.26
211
2/2042
$1,709.42
$1,617.09
$291,426.17
212
3/2042
$1,699.99
$1,626.53
$289,799.64
213
4/2042
$1,690.50
$1,636.01
$288,163.62
214
5/2042
$1,680.95
$1,645.56
$286,518.07
215
6/2042
$1,671.36
$1,655.16
$284,862.91
216
7/2042
$1,661.70
$1,664.81
$283,198.10
End of year 18
217
8/2042
$1,651.99
$2,874.52
$280,323.57
218
9/2042
$1,635.22
$1,691.29
$278,632.28
219
10/2042
$1,625.35
$1,701.16
$276,931.12
220
11/2042
$1,615.43
$1,711.08
$275,220.04
221
12/2042
$1,605.45
$1,721.06
$273,498.98
222
1/2043
$1,595.41
$1,731.10
$271,767.88
223
2/2043
$1,585.31
$1,741.20
$270,026.68
224
3/2043
$1,575.16
$1,751.36
$268,275.32
225
4/2043
$1,564.94
$1,761.57
$266,513.75
226
5/2043
$1,554.66
$1,771.85
$264,741.90
227
6/2043
$1,544.33
$1,782.18
$262,959.72
228
7/2043
$1,533.93
$1,792.58
$261,167.14
End of year 19
229
8/2043
$1,523.47
$3,003.04
$258,164.10
230
9/2043
$1,505.96
$1,820.56
$256,343.54
231
10/2043
$1,495.34
$1,831.18
$254,512.37
232
11/2043
$1,484.66
$1,841.86
$252,670.51
233
12/2043
$1,473.91
$1,852.60
$250,817.91
234
1/2044
$1,463.10
$1,863.41
$248,954.50
235
2/2044
$1,452.23
$1,874.28
$247,080.22
236
3/2044
$1,441.30
$1,885.21
$245,195.01
237
4/2044
$1,430.30
$1,896.21
$243,298.80
238
5/2044
$1,419.24
$1,907.27
$241,391.53
239
6/2044
$1,408.12
$1,918.40
$239,473.14
240
7/2044
$1,396.93
$1,929.59
$237,543.55
End of year 20
241
8/2044
$1,385.67
$3,140.84
$234,402.71
242
9/2044
$1,367.35
$1,959.16
$232,443.55
243
10/2044
$1,355.92
$1,970.59
$230,472.96
244
11/2044
$1,344.43
$1,982.09
$228,490.87
245
12/2044
$1,332.86
$1,993.65
$226,497.22
246
1/2045
$1,321.23
$2,005.28
$224,491.94
247
2/2045
$1,309.54
$2,016.98
$222,474.97
248
3/2045
$1,297.77
$2,028.74
$220,446.22
249
4/2045
$1,285.94
$2,040.58
$218,405.65
250
5/2045
$1,274.03
$2,052.48
$216,353.17
251
6/2045
$1,262.06
$2,064.45
$214,288.72
252
7/2045
$1,250.02
$2,076.49
$212,212.22
End of year 21
253
8/2045
$1,237.90
$3,288.61
$208,923.61
254
9/2045
$1,218.72
$2,107.79
$206,815.82
255
10/2045
$1,206.43
$2,120.09
$204,695.73
256
11/2045
$1,194.06
$2,132.45
$202,563.28
257
12/2045
$1,181.62
$2,144.89
$200,418.39
258
1/2046
$1,169.11
$2,157.41
$198,260.98
259
2/2046
$1,156.52
$2,169.99
$196,090.99
260
3/2046
$1,143.86
$2,182.65
$193,908.34
261
4/2046
$1,131.13
$2,195.38
$191,712.96
262
5/2046
$1,118.33
$2,208.19
$189,504.78
263
6/2046
$1,105.44
$2,221.07
$187,283.71
264
7/2046
$1,092.49
$2,234.02
$185,049.68
End of year 22
265
8/2046
$1,079.46
$3,447.06
$181,602.63
266
9/2046
$1,059.35
$2,267.16
$179,335.46
267
10/2046
$1,046.12
$2,280.39
$177,055.08
268
11/2046
$1,032.82
$2,293.69
$174,761.38
269
12/2046
$1,019.44
$2,307.07
$172,454.31
270
1/2047
$1,005.98
$2,320.53
$170,133.78
271
2/2047
$992.45
$2,334.07
$167,799.72
272
3/2047
$978.83
$2,347.68
$165,452.04
273
4/2047
$965.14
$2,361.38
$163,090.66
274
5/2047
$951.36
$2,375.15
$160,715.51
275
6/2047
$937.51
$2,389.01
$158,326.51
276
7/2047
$923.57
$2,402.94
$155,923.57
End of year 23
277
8/2047
$909.55
$3,616.96
$152,306.61
278
9/2047
$888.46
$2,438.06
$149,868.55
279
10/2047
$874.23
$2,452.28
$147,416.27
280
11/2047
$859.93
$2,466.58
$144,949.69
281
12/2047
$845.54
$2,480.97
$142,468.71
282
1/2048
$831.07
$2,495.44
$139,973.27
283
2/2048
$816.51
$2,510.00
$137,463.27
284
3/2048
$801.87
$2,524.64
$134,938.62
285
4/2048
$787.14
$2,539.37
$132,399.25
286
5/2048
$772.33
$2,554.18
$129,845.07
287
6/2048
$757.43
$2,569.08
$127,275.99
288
7/2048
$742.44
$2,584.07
$124,691.92
End of year 24
289
8/2048
$727.37
$3,799.14
$120,892.77
290
9/2048
$705.21
$2,621.30
$118,271.47
291
10/2048
$689.92
$2,636.60
$115,634.87
292
11/2048
$674.54
$2,651.98
$112,982.90
293
12/2048
$659.07
$2,667.45
$110,315.45
294
1/2049
$643.51
$2,683.01
$107,632.45
295
2/2049
$627.86
$2,698.66
$104,933.79
296
3/2049
$612.11
$2,714.40
$102,219.39
297
4/2049
$596.28
$2,730.23
$99,489.16
298
5/2049
$580.35
$2,746.16
$96,743.00
299
6/2049
$564.33
$2,762.18
$93,980.82
300
7/2049
$548.22
$2,778.29
$91,202.53
End of year 25
301
8/2049
$532.01
$3,994.50
$87,208.03
302
9/2049
$508.71
$2,817.80
$84,390.23
303
10/2049
$492.28
$2,834.24
$81,556.00
304
11/2049
$475.74
$2,850.77
$78,705.23
305
12/2049
$459.11
$2,867.40
$75,837.83
306
1/2050
$442.39
$2,884.13
$72,953.71
307
2/2050
$425.56
$2,900.95
$70,052.76
308
3/2050
$408.64
$2,917.87
$67,134.88
309
4/2050
$391.62
$2,934.89
$64,199.99
310
5/2050
$374.50
$2,952.01
$61,247.98
311
6/2050
$357.28
$2,969.23
$58,278.75
312
7/2050
$339.96
$2,986.55
$55,292.19
End of year 26
313
8/2050
$322.54
$4,203.97
$51,088.22
314
9/2050
$298.01
$3,028.50
$48,059.72
315
10/2050
$280.35
$3,046.16
$45,013.56
316
11/2050
$262.58
$3,063.93
$41,949.62
317
12/2050
$244.71
$3,081.81
$38,867.82
318
1/2051
$226.73
$3,099.78
$35,768.03
319
2/2051
$208.65
$3,117.87
$32,650.17
320
3/2051
$190.46
$3,136.05
$29,514.12
321
4/2051
$172.17
$3,154.35
$26,359.77
322
5/2051
$153.77
$3,172.75
$23,187.02
323
6/2051
$135.26
$3,191.25
$19,995.77
324
7/2051
$116.64
$3,209.87
$16,785.90
End of year 27
325
8/2051
$97.92
$4,428.59
$12,357.30
326
9/2051
$72.08
$3,254.43
$9,102.87
327
10/2051
$53.10
$3,273.41
$5,829.46
328
11/2051
$34.01
$3,292.51
$2,536.95
329
12/2051
$14.80
$2,536.95
$0.00
Year
Date
Interest
Principal
Ending Balance
1
8/24-7/25
$34,839.10
$5,079.05
$494,920.95
2
8/25-7/26
$34,392.65
$6,725.50
$488,195.45
3
8/26-7/27
$33,906.46
$7,211.69
$480,983.76
4
8/27-7/28
$33,385.13
$7,733.02
$473,250.74
5
8/28-7/29
$32,826.11
$8,292.04
$464,958.70
6
8/29-7/30
$32,226.68
$8,891.47
$456,067.23
7
8/30-7/31
$31,583.91
$9,534.24
$446,532.99
8
8/31-7/32
$30,894.68
$10,223.47
$436,309.52
9
8/32-7/33
$30,155.63
$10,962.52
$425,347.00
10
8/33-7/34
$29,363.14
$11,755.01
$413,591.99
11
8/34-7/35
$28,513.37
$12,604.78
$400,987.22
12
8/35-7/36
$27,602.17
$13,515.98
$387,471.24
13
8/36-7/37
$26,625.10
$14,493.05
$372,978.19
14
8/37-7/38
$25,577.40
$15,540.75
$357,437.44
15
8/38-7/39
$24,453.96
$16,664.19
$340,773.25
16
8/39-7/40
$23,249.30
$17,868.85
$322,904.40
17
8/40-7/41
$21,957.56
$19,160.59
$303,743.81
18
8/41-7/42
$20,572.44
$20,545.71
$283,198.10
19
8/42-7/43
$19,087.19
$22,030.96
$261,167.14
20
8/43-7/44
$17,494.57
$23,623.58
$237,543.55
21
8/44-7/45
$15,786.82
$25,331.33
$212,212.22
22
8/45-7/46
$13,955.61
$27,162.54
$185,049.68
23
8/46-7/47
$11,992.03
$29,126.12
$155,923.57
24
8/47-7/48
$9,886.50
$31,231.65
$124,691.92
25
8/48-7/49
$7,628.76
$33,489.39
$91,202.53
26
8/49-7/50
$5,207.81
$35,910.34
$55,292.19
27
8/50-7/51
$2,611.85
$38,506.30
$16,785.90
28
8/51-1/52
$271.91
$16,785.90
$0.00
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.
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.
Spreading Costs
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:
Goodwill, which is the reputation of a business regarded as a quantifiable asset
Going-concern value, which is the value of a business as an ongoing entity
The workforce in place (current employees, including their experience, education, and training)
Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers
Patents, copyrights, formulas, processes, designs, patterns, know-hows, formats, or similar items
Customer-based intangibles, including customer bases and relationships with customers
Supplier-based intangibles, including the value of future purchases due to existing relationships with vendors
Licenses, permits, or other rights granted by governmental units or agencies (including issuances and renewals)
Covenants not to compete or non-compete agreements entered relating to acquisitions of interests in trades or businesses
Franchises, trademarks, or trade names
Contracts for the use of or term interests in any items on this list
Some intangible assets, with goodwill being the most common example, that have indefinite useful lives or are "self-created" may not be legally amortized for tax purposes.
According to the IRS under Section 197, some assets are not considered intangibles, including interest in businesses, contracts, land, most computer software, intangible assets not acquired in connection with the acquiring of a business or trade, interest in an existing lease or sublease of a tangible property or existing debt, rights to service residential mortgages (unless it was acquired in connection with the acquisition of a trade or business), or certain transaction costs incurred by parties in which any part of a gain or loss is not recognized.
Amortizing Startup Costs
In the U.S., business startup costs, defined as costs incurred to investigate the potential of creating or acquiring an active business and costs to create an active business, can only be amortized under certain conditions. They must be expenses that are deducted as business expenses if incurred by an existing active business and must be incurred before the active business begins. Examples of these costs include consulting fees, financial analysis of potential acquisitions, advertising expenditures, and payments to employees, all of which must be incurred before the business is deemed active. According to IRS guidelines, initial startup costs must be amortized.