Amortization Calculator

Finance

The Amortization Calculator works out the fixed monthly payment on a loan and the total amount you will repay over its term. It uses the standard amortizing-loan formula based on the principal, the monthly interest rate, and the number of monthly payments. The formula used is: payment = P × [r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)].

Formula

Payment = P × [r(1+r)ⁿ / ((1+r)ⁿ-1)]
  • Amortization Calculator gives you a fast estimate using your inputs and updates instantly when you change any value.
  • Formula: Payment = P × [r(1+r)ⁿ / ((1+r)ⁿ-1)]
  • Input definitions: • Loan Amount: the principal you borrow • Annual Rate %: the yearly interest rate, divided by 12 to get the monthly rate • Loan Term: the number of monthly payments
  • Manual method: write down each input, apply the formula step by step, then compare your manual result with the calculator output.
  • Enter monetary values in your local currency. Enter interest rates as plain numbers (e.g. enter 5 for 5 %).
  • Assumes constant rates, no additional fees, and no tax unless stated. Actual outcomes vary with market conditions.
  • Compare against your financial goals or market benchmarks. A higher figure may mean greater cost or greater return depending on context.
  • Practical tip: test a low, medium, and high scenario to understand sensitivity before making decisions.

Example Calculation

Inputs
  • Loan Amount (PKR): 1000000
  • Annual Rate %: 5
  • Loan Term (months): 60

Suppose you enter: Loan Amount (PKR) = 1000000, Annual Rate % = 5, Loan Term (months) = 60. The calculator applies the formula (Payment = P × [r(1+r)ⁿ / ((1+r)ⁿ-1)]) and shows all output values below. Change any input field to immediately see how the result changes.

Frequently asked questions

What does amortization mean?
Amortization is the process of paying off a loan with equal periodic payments. Early payments are mostly interest; later ones are mostly principal, while the total payment stays the same.
How is the monthly payment calculated?
It uses the formula payment = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the principal, r is the monthly interest rate, and n is the number of months.
What units should I enter?
Enter monetary values in your local currency. Enter interest rates as plain numbers (e.g. enter 5 for 5 %).
How accurate are the results?
Assumes constant rates, no additional fees, and no tax unless stated. Actual outcomes vary with market conditions.
How do I interpret the result?
Compare against your financial goals or market benchmarks. A higher figure may mean greater cost or greater return depending on context.
How can I verify the calculation manually?
Use the displayed formula and work through the numbers step by step. If your manual result differs slightly, check rounding and unit conversions first.
Can I use this for planning and budgeting?
Yes. Run best-case, expected, and worst-case inputs to compare outcomes and make safer planning decisions.