# Loan amortization calculator

## Amortization

The Amortization Calculator or Loan Amortization Calculator is a handy tool that will help you calculate the payment on any amortizing loan and will give you a detailed idea of the loan in question through its repayment schedule and table. The main advantage of our calculator is its high functionality, you can choose between different interest rates and payout frequencies. You can also set an additional payment.

You can also study the loan repayment schedule on a monthly and annual basis and monitor the change in loan balances on a dynamic amortization chart. Below you can find what is the definition of amortization, as well as the amortization formula with related details on this topic.

## What is an amortized loan? - definition of depreciation

Loan amortization is the gradual reduction of the borrower's debt due to regular payments of principal and interest. The payment schedule is fixed in the loan agreement between the lender and the borrower.

For example, if you took out a loan for 100 thousand dolars and have already repaid 10 thousand dolars from the main debt, then the amortization of your loan was 10%. Traditionally, two systems of loan payments (loan amortization) are used - annuity and differentiated.

## Loan amortization formula

The following formulas are used for financial calculations related to loan amortization:

Monthly repayment formula:MP = \dfrac{A*i*(1+i)^n}{(1+i)^n-1}

- MP - monthly payment amount
- A - loan repayment amount
- i - periodic interest rate
- n - number of periods

Formula for unpaid balance:B = \dfrac{A*(1+i)^n-MP}{i((1+i)^n-1)}

- B - unpaid balance
- A - loan repayment amount
- i - periodic interest rate
- MP - monthly payment amount
- n - number of periods

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