Free Loan Payoff & Amortization Calculator

Amortization is the process of paying off a loan through regular, scheduled payments over time. Each payment covers both interest and principal. Early in the loan, most of your payment goes toward interest; as the balance decreases, more of each payment chips away at the principal. By the final payment, you owe nothing. A full amortization schedule shows exactly how each payment is split between principal and interest - which is what this calculator generates.

The standard amortization formula is: Payment = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal amount, r is the periodic interest rate (annual rate ÷ 12 for monthly payments), and n is the total number of payments. This formula ensures that every payment is equal and the loan reaches exactly zero at the end of the term. This calculator uses this formula for monthly, bi-weekly, and weekly schedules - adjusting r and n for the chosen frequency.

With bi-weekly payments, you make 26 half-payments per year - the equivalent of 13 monthly payments instead of 12. That extra payment each year goes directly toward principal, shrinking the balance faster. Less principal means less interest accrues, which can shave months or even years off a long-term loan and save hundreds or thousands of dollars in total interest. The exact savings depend on your rate, balance, and term.

Any payment above the required amount is applied to your principal balance, reducing the amount on which future interest is calculated. Even a small extra payment each month - $25 or $50 - can cut months off your payoff date and meaningfully reduce total interest paid. A future version of this calculator will include an extra-payment input. For now, you can see the effect by entering a shorter loan term.

In most cases, yes - and you will save all the remaining interest that would have accrued. However, some loan agreements include a prepayment penalty clause. This means the lender can charge a fee if you pay off the loan ahead of schedule, to compensate for lost interest income. Always check your promissory note for prepayment language before paying off early. All promissory notes generated on YourPromissoryNote.com include a clear prepayment clause.

Usury is the practice of charging an interest rate that exceeds the maximum allowed by state law. If you enter your state in this calculator and your rate exceeds the state's usury cap, a warning will appear. Violating usury laws can result in serious penalties - including forfeiture of all interest or even the principal in some states. Use our free Usury Limit Checker for a more detailed breakdown of your state's cap, exemptions, and penalties.

A secured loan is backed by collateral - an asset the lender can seize if the borrower defaults, such as a vehicle, real estate, or equipment. Because the lender has less risk, secured loans typically carry lower interest rates. An unsecured loan is based solely on the borrower's promise to repay with no collateral pledged. Unsecured loans carry more risk for the lender and often have higher interest rates. Both types are calculated using the same amortization formula.

No. This calculator is for general informational and educational purposes only. It uses the standard amortization formula and does not account for late fees, prepayment penalties, variable rate adjustments, or other loan-specific terms. Results are estimates only. Nothing on this page constitutes legal or financial advice. For help understanding your specific loan terms, consult a licensed attorney or financial advisor in your state.