What the schedule is telling you
An amortizing loan has one payment that never changes and a balance that shrinks every month. Because the interest each month is charged on the balance you still owe, the amount of interest falls as the loan gets older, and the leftover — the part that clears the debt — grows to match. Add both together and you always get the same payment.
Take the example above: $30,000 at 6% over ten years, a payment of $333.06. Here is how one year compares with another.
| Year | To principal | To interest | Balance left |
|---|---|---|---|
| 1 | $2,258.14 | $1,738.58 | $27,741.86 |
| 5 | $2,868.95 | $1,127.77 | $17,227.89 |
| 10 | $3,870.01 | $126.94 | $0.00 |
In the first year, 44% of what you hand over is interest. In the last year it is 3%. The payment never moved.
Why the last payment is a little different
Lenders bill in whole cents, so the payment is rounded, and rounding every month leaves a few cents standing at the end. Rather than adding a stray payment of three cents, the final instalment absorbs the difference — which is exactly what a real payoff quote does. It is why the schedule here always ends on the last month of the term with a balance of precisely zero.
Using the schedule to decide something
The schedule is most useful when you are weighing a choice rather than admiring the maths:
- Is an overpayment worth it? Enter it and compare the interest saved against what else that money could do. Early in a loan the saving is at its largest.
- When will I owe less than this thing is worth? Read down the balance column and compare it with what you think the car or equipment will be worth that year.
- What does a longer term cost? Change the term and watch the total interest, not the monthly payment.
What it does not cover
This prices fixed-rate loans with equal monthly payments. It does not model a variable rate, an interest-only period, a balloon payment at the end, or a loan where the interest was worked out up front and baked into the balance. For a home loan with tax and insurance in the payment, use our mortgage calculator.