What an amortization schedule shows
Amortization is the bookkeeping behind a fixed-payment loan. The payment stays constant, but the schedule reveals how each one is carved into an interest piece and a principal piece. The interest piece equals the current balance times the monthly rate, and everything left over reduces the balance.
Watching the schedule month by month makes the mechanics obvious: the interest column starts high and falls steadily, the principal column starts low and rises, and the balance column glides toward zero by the final row.
Reading the table and charts
Each row of the schedule is one payment. The principal and interest columns always add up to the payment (give or take a rounding cent on the last row, which is trued up to clear the balance exactly).
The donut chart sums those columns over the whole loan so you can see total principal against total interest at a glance. The balance line plots the ending balance at each year end, giving a clean picture of how quickly the debt disappears.
Putting the schedule to work
An amortization schedule is more than a curiosity — it is a planning tool.
- Spot how little principal early payments retire, which explains slow payoff at the start.
- Estimate the payoff balance for any month if you plan to sell or refinance.
- Model extra payments by imagining the balance dropping faster than the table shows.
- Compare two rates or terms by reading off total interest from each schedule.
Formula
payment = P·r / (1 − (1+r)⁻ⁿ); each month: interest = balance·r; principalPaid = payment − interest