Amortization Calculator

This builds the full amortisation schedule for a fixed-rate loan: every payment, split into interest and principal, with the balance remaining after each one. It shows the payment, the total interest over the term, and what that interest costs per $100 borrowed. Because the payment frequency and an optional extra payment are both inputs, it also answers the question schedules are usually used to settle — whether paying more often, or paying more, is what actually saves money. The two effects are reported separately, because they are very different in size and are almost always conflated.

An amortising loan has a level payment, and the split inside that payment moves. Interest is charged on what you still owe, so early on most of the payment is interest and very little touches the balance; as the balance falls the interest charge falls with it and the principal share grows. Nothing about the payment changes — only its composition.

That is why the schedule is worth reading rather than summarising. On a long loan at a normal rate, the first payment can be more interest than principal, and the point where that reverses can be years away. On a 30-year mortgage at 6.5%, total interest exceeds the amount borrowed, so cumulative principal never overtakes cumulative interest at all. On a six-year car loan at 7.4%, principal is ahead from the very first payment. Same arithmetic, opposite shape, and the only way to know which you have is to look.

Payment frequency changes less than its reputation suggests. Paying more often does reduce interest, because the balance is lower for more of the time — but on this page's default loan the whole effect from monthly to fortnightly is $45.49, under 0.7% of the interest. From annual to daily, the extremes of what this calculator offers, it is $1,002.29. Real, and nothing like what biweekly plans advertise.

The reason those plans appear to save so much is that they change the amount paid, not just the timing. A "biweekly" plan bills half the monthly payment every two weeks, and 26 half-payments is thirteen monthly payments, because a year holds 26 fortnights but only 24 half-months. On the default loan that is $6,276.14 a year against $5,793.24 — an extra $482.90, which is one whole monthly payment. The saving is the thirteenth payment.

This distinction is practical rather than pedantic. If your servicer will not bill fortnightly, or holds part-payments rather than applying them on receipt, you are not locked out of the saving: paying a twelfth more each month captures nearly all of it. And if your aim is to clear the loan sooner, the extra-payment field is the lever — not the frequency selector.

Paid monthly, the payment is $482.77 and the loan costs $6,759.27 in interest — 24.1% of the amount borrowed, or $24.14 for every $100 financed. Because the term is short and the rate moderate, principal exceeds interest from the first payment onward; there is no crossover to wait for.

Switch to fortnightly and the payment becomes $222.52, taken 156 times. It looks like a much smaller commitment and is not: 26 × $222.52 is $5,785.52 a year against $5,793.24 paid monthly, a difference of $7.72. Total interest falls from $6,759.27 to $6,713.78 — a saving of $45.49 over six years, which is 0.67% of the interest and about 63 cents a month. That is the whole effect of the frequency, isolated.

Now add $75 a month and keep paying monthly. Interest falls to $5,609.05, a saving of $1,150.22, and the loan clears in 61 payments instead of 72 — 5 years 1 month instead of 6 years. The extra payment does 25.3 times as much work as the frequency change, and it is the only one of the two that shortens the term.

Which explains what the advertised biweekly plans are really doing. A plan billing half the monthly payment — $241.39 — every two weeks collects $6,276.14 a year rather than $5,793.24. That extra $482.90 is, to the cent, one additional monthly payment against a payment of $482.77. Such a plan clears the loan in 141 fortnights — 5 years 5 months — and saves $727.77. Of that, $45.49 is the frequency and the rest is the money.

The useful test is therefore to compare annual outlay, not payment size. If two plans collect different amounts per year, the cheaper one is cheaper because it collects more — and you can generally collect more from yourself without changing your billing schedule at all. Paying $40.23 extra a month here, a twelfth of the payment, saves $670.98: 92% of what the fortnightly plan achieves, with no plan and no fees.