Loan schedule
How to read an amortization schedule
An amortization schedule follows a loan one payment at a time. Each row shows how much was paid, how much covered interest, how much reduced principal, and what balance remains.
The meaning of each column
- Payment number: the position of the payment in the loan term.
- Payment: the amount due for principal and interest in the modeled period.
- Interest: the periodic rate multiplied by the balance before the payment.
- Principal: the payment minus that period's interest.
- Remaining balance: the prior balance minus principal paid.
Only the principal portion reduces the amount borrowed. The interest portion is the modeled cost of using the outstanding balance for that period.
Generate an amortization schedule and inspect every month.
Why the split changes over time
For a typical fixed-rate loan, the required payment can remain the same while its composition changes. At the beginning, the outstanding balance is high, so monthly interest is high. After each payment reduces principal, the next month's interest is calculated on a smaller amount.
The Consumer Financial Protection Bureau's amortization explanation describes the same pattern: more of an early payment goes to interest, while more of a later payment goes to principal.
Worked example
Read three points in a five-year schedule
Inputs: $20,000 principal, 6% fixed annual rate, 60 months, and a required payment of approximately $386.66.
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $386.66 | $286.66 | $100.00 | $19,713.34 |
| 30 | $386.66 | $331.27 | $55.39 | $10,746.74 |
| 60 | $386.66* | $384.73 | $1.92 | $0.00 |
*Before display rounding, the final payment is capped at the remaining principal plus the final month's interest. A lender may handle cents differently.
Across all 60 rows, the modeled interest totals $3,199.36. Looking only at the monthly payment would hide how that cost is distributed.
Open the complete schedule →What a schedule helps you compare
A schedule can answer when the balance may fall below a certain amount, how much interest is paid during a year, and how an extra principal payment changes future rows. Compare scenarios with the same principal, rate, and term so the source of the difference stays clear.
Cumulative interest and remaining balance answer different questions. Cumulative interest measures modeled borrowing cost to date. Remaining balance measures principal still owed.
The schedule is still an estimate
Plain Finance Tools models one fixed annual rate divided into monthly periods. It excludes fees, taxes, insurance, escrow, missed payments, late charges, and variable rates. The lender's contract and servicing records determine the real allocation.
See the loan payment formula for how the required payment is set and the methodology for rounding and final-payment assumptions.
Common questions
Frequently asked questions
What does an amortization schedule show?
It shows each payment, the amount applied to interest and principal, and the remaining balance after the payment.
Why is more interest paid near the beginning?
Interest is calculated on the outstanding balance. The balance is highest at the beginning, so the interest portion starts higher.
Why can the payment stay fixed while the split changes?
As principal declines, monthly interest declines. More of the same fixed payment can therefore reduce principal.
Why might a lender schedule differ?
A lender may use daily interest, exact payment dates, fees, different rounding, or contractual rules that a simplified monthly schedule does not model.