## Frequently asked questions

**What is amortization?**

Amortization is the process of reducing an amount over a given time period. In our case it means the payment of a loan in multiple installments. These repayment installments are determined by an amortization schedule (also known as amortization table or amortization chart). Each of these regular periodic payments consist of principal and interest as well. Common example of the amortization process is a mortgage loan, personal loan or car loan and it is one of the simplest and most used loan repayment models today.

**What is an amortization schedule?**

For every amortizing loan (e.g., a mortgage) an amortization calculator is able to generate a relevant amortization schedule. Amortization schedule is a table detailing every single regular payment through the life of a loan. This table should at least include the amount of each regular installment, the exact date of the payment involved, the exact amount of money put towards interest, the exact amount which will be applied to the principal balance and finally the balance of outstanding principal after the payment is made.

**What is an amortization chart?**

Amortization chart can be used as a synonym expression for the amortization schedule table, but can also mean a graphical chart that is visualizing the amortization process. In this case the visual chart should also contain all the data described above.

**What is an amortization calculator?**

Since the exact amount of paid interest, paid principal and outstanding balance is different for each regular periodic installment, usually an amortization calculator (also known as loan schedule calculator) is used to automate and simplify the creation of the amortization schedule for an amortizing loan such as a mortgage loan. Thanks to the Internet, these calculators are now accessible to a wide audience free of charge.

**Explain the meaning of loan amortization!**

Principal is the whole amount that some individual or legal entity borrowed from a lender or lending institution. If this principal is paid down over the life of the loan through equal regular installments (determined by the amortization schedule), we are talking about an amortizing loan. Each of these multiple installments consist of two portions: the amount put towards interest and the amount put towards the outstanding principal balance. Outstanding principal balance is the remaining amount of the loan (paid principal is subtracted from the original principal) on which the lender charges interest.

**Explain the meaning of mortgage amortization!**

Mortgage amortization is the same as loan amortization, only in this case we specify the type of the loan. When a mortgage loan is paid down in regular periodic payments determined by an amortization table, we are talking about the mortgage amortization process.

**Who should use an amortization calculator?**

Whether you are a current homeowner with a mortgage, a potential homeowner who needs a mortgage loan, have a personal loan, car loan or any other kind of amortizing loan, want to do your taxes or simply you are interested in knowing how much you still owe, our loan schedule calculator can be a great help to you. A financial tool (like our calculator) can quickly determine the estimated amount of your regular payments.

**Can you describe the required data entry fields?**

Although the input fields are pretty much self explanatory, we will give a little more detailed explanation for them:

**Loan amount** is the exact amount that you already borrowed or wish to borrow in the near future. For a mortgage loan this should be the down payment amount subtracted from the value of the home. E.g., if the down payment is $67,500 for a house that is worth $450,000.00, the loan amount would be $382,500.00.

**Interest rate** is the annual interest rate paid for the amount of money that you wish to borrow. Interest rate is expressed in percents (%). Annual mortgage interest rates tend to be around 4-5% nowadays for both new homes and mortgage refinance as well.

**Loan length** is the time period while you have to make regular payments to the lender, bank or lending institution. At the end of this period the loan will be completely paid off.

**Loan start day** should be the date when your loan application was approved. Please do not confuse it with the date of your first payment. Depending on your payment frequency, the first payment is made on the next scheduled date. E.g., if your application was approved at 26/02/2006 and your selected payment frequency is monthly, your first payment should be on 26/03/2006.

The **required fields** are: loan amount, interest rate and payment frequency.

**Can you describe the result fields?**

As with the input fields, we will describe the result fields as well:

**Period** shows the ordinal number of a specific payment in the amortization schedule. The total number of periods can be calculated if we multiply the number of annual periods with the length in years. E.g., a bi-weekly paid 5 year length loan has 130 periods total (26 time 5 equals 130).

**Date** field shows the exact scheduled date in the amortization table, until when a regular installment should be paid to the lender, bank or lending institution. If there is no date given by the user, the loan start date will be replaced with todays date.

**Interest paid** shows the portion of the regular payment that is applied towards interest. Initially a larger part of the regular payment goes towards interest and as the loan matures, less and less interest is paid on the decreased outstanding principal.

**Principal paid** reveals the specific monetary amount put towards the outstanding balance as the second portion of the regular installment. Contrary to interest paid, as the loan matures, larger and larger amount is put towards the outstanding principal balance.

**Remaining balance** or outstanding principal balance is the remaining amount of the loan that you owe to the lender at a specific date. This is the portion of your loan that has not been paid yet. This amount can be calculated, if the total paid principal is subtracted from the original loan amount.

**Can I download this calculator to my computer?**

No, unfortunately this calculator cannot be downloaded. This is an online amortization calculator that can be run only in a browser window. Although our calculator cannot be downloaded, we offer OpenOffice Calc and Microsoft Office Excel amortization calculator spreadsheets and templates for download. If that would not be enough, we are sure that these Google search results can help you to find what you are looking for.

**Can I use this calculator on my website?**

We are really sorry, but for now only a WordPress loan calculator widget is available for download. A pure Java based website amortization calculator development is among our future plans.

**Can I use this calculator on my blog?**

Yes, if you are using WordPress as the blog engine. We are glad to inform you, that we have created a simple little JavaScript based wordpress loan calculator plugin (the results are shown instantly on the same page), that you can download and install in a few easy steps. For more information about this widget, please visit the plugin page by clicking the link above or in the navigation menu.

**Do you know any other calculator that can handle extra payments?**

Since our online amortization calculator does not handle extra payments, you could visit this mortgage amortization calculator website, this loan payment calculator website or this auto loan payoff calculator website.