Calculate your take-home pay after taxes and deductions
$
Yearly
Monthly
Bi-weekly
Weekly
Additional Withholdings
%
$
Gross Pay
$60,000
Taxes
$12,579
Deductions
$3,000
Net Pay
$44,421
Salary Breakdown
Gross Pay
Taxes
Deductions
Net Pay
Detailed Breakdown
Federal Income Tax
$6,847
State Income Tax
$2,400
FICA Tax
$4,590
Retirement
$3,000
Health Insurance
$2,400
Take-Home Percentage
74.0%
Pay by Frequency
Yearly
$44,421
Monthly
$3,702
Bi-weekly
$1,708
Weekly
$854
The Amortization Calculator is one of the most essential financial tools available online. It helps individuals, businesses, and investors plan and understand how their loans or assets reduce in value over time.
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.
Whether you’re managing a home loan, car loan, or startup cost, this guide will walk you through everything you need to know about amortization, repayment schedules, and how to make smarter financial decisions using the right tools.
What Is Amortization?
There are two general definitions of amortization:
Loan Amortization: The systematic repayment of a loan over time through scheduled payments.
Accounting Amortization: The gradual spreading of the cost of an expensive or long-lived item over multiple periods, often used for intangible assets like patents or copyrights.
Both play critical roles in personal finance and business accounting — let’s explore each in detail.
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. Each payment is split into two parts:
A portion that covers interest, and
A portion that reduces the principal (the original amount borrowed).
Over time, the interest portion decreases while the principal portion increases — this is the foundation of loan amortization.
Example: How Loan Amortization Works
Let’s say you borrow $100,000 at 5% interest for 20 years. Your first payment will be mostly interest, but by the 10th year, more of your payment will go toward the principal.
This shift is visible in an amortization schedule, which lists every payment, showing how much goes to interest and principal each month.
What Is an Amortization Schedule?
An amortization schedule (also known as an amortization table) is a detailed breakdown of each loan payment over time.
It shows:
Payment number
Payment date
Interest paid
Principal paid
Remaining balance
This schedule allows borrowers to see exactly how much of each payment goes toward paying off the loan and how long it will take to become debt-free.
Benefits of Using an Amortization Schedule
Clarity: Understand your loan’s life cycle.
Financial Planning: See how extra payments can reduce total interest.
Transparency: Track your remaining balance at any point in time.
Goal Setting: Plan when you’ll be debt-free.
💡 Use our Amortization Calculator to automatically generate a detailed schedule for your loan.
Why Credit Cards Aren’t Amortized
Unlike traditional loans, credit cards are revolving debt. You can carry balances month-to-month and pay variable amounts. Because there’s no fixed payment structure or end date, credit cards are not amortized.
If you’re looking to plan credit card repayments, try our:
Credit Card Calculator – to compute interest and balances, or
Credit Card Payoff Calculator – to plan a practical payoff strategy.
Personal Loans – Fixed payments for general borrowing.
Student Loans – Typically fixed-rate loans with amortization schedules.
Each of these uses the same fundamental principle: you pay both interest and principal regularly until the loan balance reaches zero.
Fixed vs. Adjustable Rate Loans
Fixed-Rate Loans: The interest rate stays constant, making amortization predictable.
Adjustable-Rate Loans (ARMs): The rate changes, so your amortization schedule fluctuates.
Our Amortization Calculator is ideal for fixed-rate loans, but we also provide tools for variable-rate and hybrid loan types.
Spreading Costs: Amortization in Accounting
In business accounting, amortization refers to allocating the cost of intangible assets over their useful lives.
Unlike loan amortization, this form of amortization doesn’t involve cash payments. Instead, it’s a non-cash expense used to reflect how intangible assets (like patents or trademarks) lose value over time.
Examples of Intangible Assets
Goodwill
Patents and copyrights
Customer lists
Trademarks and trade names
Licenses and permits
Non-compete agreements
These are amortized under Section 197 of U.S. law, allowing businesses to deduct part of their cost each year.
Tangible vs. Intangible Asset Amortization
Tangible assets like buildings or machinery are typically depreciated, not amortized. Intangible assets like software, trademarks, and goodwill are amortized.
This distinction helps businesses maintain accurate financial statements and comply with IRS and GAAP guidelines.
How to Use an Amortization Calculator
Our Amortization Calculator makes it simple to visualize your loan repayment journey.
Steps:
Enter Loan Amount: The principal (e.g., $200,000).
Enter Interest Rate: Annual percentage rate (e.g., 5%).
Enter Loan Term: Duration (e.g., 30 years).
Select Payment Frequency: Monthly, biweekly, etc.
Click Calculate: Instantly view your payment amount, total interest, and amortization table.
You’ll see how much interest you’ll pay and how long until your loan is fully paid off.
Pro Tip: Experiment with extra payments to see how much interest you can save.
Amortization Formula
The basic formula for calculating amortization payments is:
Our calculator performs this automatically, but understanding the math helps you appreciate how interest works.
Understanding Principal and Interest Breakdown
Each payment you make includes:
Principal: Reduces the loan balance
Interest: The cost of borrowing money
In the early stages of a loan, most of your payment goes toward interest. Over time, as the principal decreases, more of your payment goes toward reducing the loan.
This dynamic is central to amortization — and why viewing an amortization table is so useful.
Amortization vs. Depreciation
Feature
Amortization
Depreciation
Assets
Intangible (patents, goodwill)
Tangible (equipment, buildings)
Purpose
Spread cost over time
Reflect asset wear and tear
Method
Straight-line usually
Straight-line or accelerated
Accounting Impact
Non-cash expense
Non-cash expense
Both serve the same goal: allocate cost over time, ensuring financial statements reflect realistic asset values.
Amortizing Startup Costs
In the U.S., startup costs — such as market research, consulting fees, or employee training — can be amortized if they meet IRS conditions.
They must be:
Incurred before the business starts operations, and
Normally deductible if incurred by an active business.
These costs are typically amortized over 15 years, helping startups manage their tax liability effectively.
How the IRS Defines Amortization (Section 197)
Section 197 of the IRS Code defines which intangible assets can be amortized. Examples include:
Goodwill
Customer relationships
Non-compete clauses
Licenses and franchises
However, certain items cannot be amortized — such as interest in land, existing leases, and self-created goodwill.
Why Amortization Matters
Amortization is more than a technical accounting term. It helps:
Borrowers understand loan costs and payoff timelines.
Businesses track asset value and manage tax deductions.
Investors assess true profitability and balance sheet health.
In short, it’s the backbone of financial transparency.
Tools Related to the Amortization Calculator
On this site, you can find multiple calculators tailored to your needs:
Mortgage Amortization Calculator
Car Loan Calculator
Personal Loan Calculator
Depreciation Calculator
Credit Card Payoff Calculator
Each tool complements the Amortization Calculator by addressing specific financial goals.
How Extra Payments Affect Amortization
Making extra payments toward your principal can significantly reduce total interest costs. Use the calculator to simulate:
One-time extra payments
Monthly additional payments
Annual lump-sum contributions
You’ll see how your loan term shortens and how much interest you save over time.
Frequently Asked Questions
Q1: What is the difference between amortization and depreciation? Amortization applies to intangible assets; depreciation applies to tangible ones.
Q2: Can I use the amortization calculator for student loans? Yes, most student loans follow an amortization structure.
Q3: How often should I review my amortization schedule? It’s wise to check it yearly or whenever you make extra payments.
Q4: Can amortization schedules change? Yes — for adjustable-rate or refinanced loans.
Q5: What’s the best way to pay off a loan faster? Make consistent extra payments toward principal and use the calculator to visualize progress.
Conclusion: Take Control with the Amortization Calculator
Understanding how amortization works empowers you to make informed decisions — whether managing a mortgage, refinancing a car loan, or accounting for business assets.
Use the Amortization Calculator to:
Visualize your repayment schedule
Understand interest vs. principal dynamics
Explore savings from extra payments
Financial clarity starts with knowledge — and with the right tools, you can pay smarter, save more, and plan confidently.
