Amortization guide

An amortization schedule shows how each loan payment is split between interest and principal over time. Early payments usually carry more interest; later payments usually reduce more principal.

Why the split changes

Interest is normally calculated against the remaining balance. As the balance falls, less of each payment is needed for interest and more can go toward principal.

How extra payments help

Extra payments can reduce the balance faster, which may reduce total interest and shorten the term. The benefit depends on when the extra payment is made and whether the lender allows overpayments without penalty.

What to check

Before relying on a schedule, check the interest type, compounding rules, payment timing, fees and whether the lender recalculates the loan after extra payments.