Amortization Calculator

Amortization schedule

While the Amortization Calculator can serve as a basic tool for most, if not all, amortization calculations, there are other calculators available on this website that are more specifically geared for common amortization calculations.

What is Amortization?

Amortization can be understood in two ways. One describes the orderly pay‑down of a loan across its term. The other pertains to accounting, where the expense of a costly, durable asset is allocated over several accounting periods. Details for each definition follow in the sections ahead.

Paying Off a Loan Over Time

When someone secures a mortgage, an auto loan, or a personal loan, they typically remit monthly installments to the lender – a classic application of amortization. Part of each installment covers the accrued interest, while the remainder chips away at the outstanding principal. Because interest is calculated on the remaining balance, it gradually shrinks as the principal is reduced. This progression is illustrated in an amortization schedule.

Credit cards operate differently; they are revolving credit lines rather than amortized loans. The balance can be carried forward month after month, and the payment amount may vary. For credit‑card calculations, try our Credit Card Calculator, or use the Credit Cards Payoff Calculator to map out a realistic repayment plan. Loans such as interest‑only or balloon loans also fall outside the amortization model – the former postpones principal payments, while the latter requires a large final payment at maturity.

Amortization Schedule

An amortization schedule – often called an amortization table – lists every scheduled payment for a loan that is being amortized. Our calculator produces both yearly and monthly versions of this table. Each entry shows how much of the payment goes toward interest and how much reduces the principal, which changes from period to period. The schedule makes it easy to see the cumulative interest and principal paid, as well as the outstanding principal after each payment.

Standard amortization tables assume regular payments and usually ignore any additional contributions or fees. They are primarily designed for fixed‑rate loans and don’t accommodate adjustable‑rate mortgages, variable‑rate loans, or lines of credit.

Spreading Costs

Companies often acquire high‑cost, long‑lasting assets—such as machinery, buildings, or equipment—that are treated as investments. For accounting purposes, the expense of these assets is spread over their useful life, a process akin to amortization but commonly referred to as depreciation. By allocating the cost across the expected lifespan, financial statements avoid distortion from a single large purchase. Learn more or run depreciation calculations with our Depreciation Calculator.

In accounting, amortization also applies to intangible assets—like patents or copyrights—whose value can be written off over time. Under U.S. Section 197, these assets may be deducted on a monthly or yearly basis. As with tangible assets, a calculated amortization schedule can forecast the timing of these deductions. Typical intangibles that are amortized include:

1. Goodwill, which is the reputation of a business regarded as a quantifiable asset
2. Going-concern value, which is the value of a business as an ongoing entity
3. The workforce in place (current employees, including their experience, education, and training)
4. Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers
5. Patents, copyrights, formulas, processes, designs, patterns, know-hows, formats, or similar items
6. Customer-based intangibles, including customer bases and relationships with customers
7. Supplier-based intangibles, including the value of future purchases due to existing relationships with vendors
8. Licenses, permits, or other rights granted by governmental units or agencies (including issuances and renewals)
9. Covenants not to compete or non-compete agreements entered relating to acquisitions of interests in trades or businesses
10. Franchises, trademarks, or trade names
11. Contracts for the use of or term interests in any items on this list

Some intangible assets, with goodwill being the most common example, that have indefinite useful lives or are "self-created" may not be legally amortized for tax purposes.

According to the IRS under Section 197, some assets are not considered intangibles, including interest in businesses, contracts, land, most computer software, intangible assets not acquired in connection with the acquiring of a business or trade, interest in an existing lease or sublease of a tangible property or existing debt, rights to service residential mortgages (unless it was acquired in connection with the acquisition of a trade or business), or certain transaction costs incurred by parties in which any part of a gain or loss is not recognized.

Amortizing Startup Costs

In the United States, costs incurred while exploring or establishing a new business can be amortized, provided certain criteria are met. The expenses must be directly related to setting up an active enterprise and must be paid before the business officially begins operations. Typical examples are consulting fees, due‑diligence analyses for potential acquisitions, pre‑launch advertising, and wages paid to early employees. According to IRS rules, these initial startup expenditures are subject to amortization.