Amortization Calculator | Best Calculator

Amortization Calculator

Please enter a valid positive number
Please enter a value between 1 and 100
Please enter a rate between 0 and 100
Please enter a valid year (1900-2100)
Please enter a valid positive number
Please enter a valid positive number
Please enter a valid positive number
Monthly Payment: $0.00
Total Interest: $0.00
Total Cost: $0.00
Payoff Date: -
Payment Schedule
# Date Payment Principal Interest Balance
Calculation Formula:
M = P × (r(1+r)ⁿ) / ((1+r)ⁿ - 1)

Where:
M = Monthly payment
P = Principal loan amount
r = Monthly interest rate (annual rate ÷ 12)
n = Total number of payments (loan term × 12)

Example:
$200,000 loan at 6% for 15 years (180 payments):
r = 0.06 ÷ 12 = 0.005
M = 200000 × (0.005(1+0.005)^180) ÷ ((1+0.005)^180 - 1) = $1,687.71
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Easily calculate loan repayments and explore how amortization works using this versatile Amortization Calculator. While this tool handles general amortization needs, you may find our other calculators more tailored to specific financial situations:

What Is Amortization?

Amortization has two common meanings depending on the context. In finance, it refers to paying off a loan gradually over time through scheduled payments. In business accounting, amortization involves distributing the cost of long-term assets across multiple accounting periods. Both are explained in more detail below.

Loan Amortization Explained

When you take out a loan—like a mortgage, car loan, or personal loan—you usually repay it in fixed monthly installments. Each payment includes both interest and principal. Early in the loan term, a larger portion goes toward interest. Over time, as the principal balance decreases, more of your payment is applied to the principal. This repayment method is known as amortization.

You can see this process clearly using an amortization table, which breaks down each payment period by principal and interest.

On the other hand, revolving credit—like credit cards—is not amortized. You’re allowed to carry a balance and vary your monthly payments. For planning and budgeting help with credit cards, try our Credit Card Calculator or the Credit Card Payoff Calculator. Other types of non-amortized loans include:

  • Interest-only loans – where you pay only interest for a set period.

  • Balloon loans – where a large portion of the principal is due at the end.

What Is an Amortization Schedule?

An amortization schedule, also known as an amortization table, outlines each loan payment and how it is divided between interest and principal. It also shows the remaining balance after each payment.

When you use our calculator, it automatically generates both monthly and yearly amortization schedules to help you visualize your repayment timeline.

Key features of amortization schedules:

  • Track how much of each payment goes toward interest vs. principal.

  • Monitor the remaining loan balance over time.

  • Understand the cumulative interest paid.

Note: Standard amortization tables assume a fixed interest rate and don’t typically factor in extra payments, fees, or changes in rate. For loans with variable rates or flexible terms, the table may not fully reflect your real-world costs.

Amortization in Accounting: Spreading Costs Over Time

In the business world, amortization also refers to allocating the cost of intangible assets over time. Companies often invest in assets like patents, trademarks, or software, which are used over many years. To avoid skewing financial reports with one large expense, businesses spread the cost of these assets across their useful life.

Examples of intangible assets that are often amortized:

  • Patents, copyrights, trademarks

  • Customer lists and brand goodwill

  • Franchises, licenses, or permits

  • Business processes or proprietary systems

  • Non-compete agreements or covenants

Under IRS guidelines (Section 197), these assets can be amortized over a defined period, usually 15 years. However, not all intangible assets qualify. Self-created assets or those without a fixed useful life—such as goodwill in some cases—may not be amortizable for tax purposes.

Assets that typically do not qualify for amortization under U.S. tax law include:

  • Business interests or land

  • Contracts and leases

  • Most computer software

  • Intangibles not acquired as part of a business purchase

  • Mortgage servicing rights not acquired through a business

Amortizing Startup Costs

If you’re starting a new business, certain startup expenses may be eligible for amortization. These include costs incurred while researching or setting up a new business, such as:

  • Consulting and legal fees

  • Market analysis or feasibility studies

  • Advertising before launch

  • Employee training or recruitment

To qualify, these costs must be incurred before the business becomes operational and must be expenses that would normally be deductible by an existing business. The IRS allows you to amortize these startup costs over a 15-year period if certain conditions are met.

Amortization is a powerful concept used in both personal finance and business accounting. Whether you’re repaying a loan or managing long-term business assets, understanding how amortization works can help you make better financial decisions.

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