Amortisation explained
How each payment splits into interest and principal, and why early months are interest-heavy.
Published
Amortisation is the process of clearing a loan through regular payments. An amortisation schedule lists, for each month, the payment, interest charged, principal repaid and remaining balance.
Why early payments are mostly interest
Interest is calculated on the outstanding balance. Near the start, almost all of the loan is still outstanding, so interest is high and only a small slice of the EMI reduces principal. Later, the balance is smaller, so more of each payment goes to principal.
Extra payments
Paying more than the contractual EMI (where allowed) cuts principal earlier, which reduces future interest and can shorten the term. Use the extra-payment calculator to estimate the saving — and check your agreement for early repayment fees.
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Calculators and articles on LoanCalc Lab are illustrative and not personalised financial advice or a credit offer. Always check the lender’s disclosure for your country before you borrow.