Understanding Loan Payment Math

Principal is the amount you borrow. Interest is the cost of borrowing that money over time. Early payments on amortizing loans usually include more interest; later payments apply more to principal.

For a fixed-rate installment loan, the monthly payment is designed so principal and interest are paid off exactly over the term. Changing the rate or term changes both the payment and total interest paid.

A schedule shows every payment split. It is useful when comparing a shorter term, testing extra payments, or explaining costs to a client. Try these scenarios in the Calnovix Loan Calculator.