Amortization Schedule
IntermediateAn amortization schedule is a table showing every payment on a loan, how much of each payment goes to interest and how much to principal, and the balance remaining after each payment.
With most loans, every monthly payment is the same size, but what it pays for changes over time. An amortization schedule makes this visible, line by line.
Take a loan of 10,000 at 6% a year, repaid monthly over one year. The payment is about 860.66 a month. In the first month, interest is 50, because 0.5% of 10,000 is 50, so about 810.66 reduces the principal and the balance falls to about 9,189.34. In the second month, interest is charged on that smaller balance, so slightly less goes to interest and slightly more to principal. By the final payment, almost all of it repays principal.
On long loans, such as 25-year mortgages, the pattern is striking: early payments are mostly interest, and the balance falls slowly at first.
Reading an amortization schedule helps borrowers see how much they still owe at any point, how much interest they will pay in total and how much an extra payment would save. Lenders usually provide one, and spreadsheets can create one easily.
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