InvestCalc

Amortization

The schedule by which a loan is paid off over time through fixed payments of principal and interest.

In plain terms

On a fully-amortizing fixed-rate loan, each monthly payment stays the same while the split shifts: early payments are mostly interest, later payments mostly principal. The standard payment is P·r(1+r)ⁿ ÷ ((1+r)ⁿ−1), where r is the monthly interest rate and n is the number of payments.

See also

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