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A loan payment is computed using the PMT (payment) formula: P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal borrowed, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments. This formula assumes a fixed-rate, fully amortizing loan — meaning every payment is equal and the balance reaches exactly zero on the final payment date.
The key insight from the amortization schedule is that early payments are mostly interest. On a $20,000 loan at 7% over 48 months, the first payment of $479 includes $117 in interest and only $362 in principal. By the final payment, that same $479 is almost entirely principal. This shift is automatic — it is how amortization works, and it is why paying extra in the early months saves disproportionately more interest than paying extra later.
The SAC system (Constant Amortization) keeps the principal reduction constant each month, so payments start high and decrease over time as the balance falls. The Price system (also called PMT or constant installment) keeps payments equal throughout — the principal portion grows and the interest portion shrinks with each payment, but the total stays the same.
SAC results in less total interest paid because the balance decreases faster in the early months — but the higher initial payments require more budget flexibility. Price offers payment predictability and lower initial payments at the cost of more total interest. Which is better depends on your cash flow situation and how long you plan to hold the loan.
Enter the loan amount, annual interest rate, and term in months. The calculator outputs your monthly payment, total interest paid over the life of the loan, and a full amortization schedule showing the balance after each payment. You can toggle between SAC and Price systems, add a grace period, and export the schedule as CSV or Excel.
Results are for educational and planning purposes. Actual loan terms — including any origination fees, prepayment penalties, or rate adjustments — affect the true cost of borrowing. Always compare APR (which includes fees) across lenders, not just the nominal interest rate.