How Fixed-Rate Loan Amortization Works
Loan amortization is the scheduled repayment of debt principal and accrued interest through regular periodic installments over a defined time horizon. Each payment is divided into an interest portion (the cost of borrowing against the current outstanding balance) and a principal portion (equity repayment that reduces the debt).
Equal Payment (Annuity) vs. Equal Principal (Linear)
- Equal-Payment Amortization (Fixed Monthly Installment): The borrower pays a constant dollar amount every month. In early periods, interest comprises the bulk of the payment; over time, as the remaining balance declines, interest drops and principal repayment accelerates until the loan reaches a zero balance.
- Equal-Principal Amortization (Decreasing Monthly Installment): The borrower pays a fixed amount of principal each month plus whatever monthly interest has accrued on the remaining balance. Installments start higher and decrease steadily, resulting in faster principal reduction and lower total interest paid over the life of the loan.
Mathematical Formulas
P_periodic = L * [ r * (1 + r)^n ] / [ (1 + r)^n - 1 ]
- L = Initial loan principal balance
- r = Periodic monthly interest rate (Annual Rate / 12)
- n = Total number of monthly installments (Term in Years × 12)
Benefits of Additional Principal Payments
Making recurring additional principal payments directly reduces the outstanding debt ahead of schedule. Because interest is computed on the remaining principal balance, extra payments compound into significant cumulative interest savings and substantially shorten the time to debt-free ownership.
Frequently Asked Questions
- Was unterscheidet Annuitätendarlehen von Tilgungsdarlehen?
- Beim Annuitätendarlehen bleibt die monatliche Gesamtrate über die Zinsbindung konstant (der Zinsanteil sinkt, der Tilgungsanteil steigt). Beim Tilgungsdarlehen bleibt der Tilgungsbetrag monatlich gleich, sodass die Gesamtrate kontinuierlich sinkt und insgesamt weniger Zinsen anfallen.
- Wie wirken sich monatliche Sondertilgungen aus?
- Sondertilgungen verringern die Restschuld sofort. Da der Sollzins immer auf die aktuelle Restschuld berechnet wird, sinkt die Zinslast für alle Folgemonate drastisch und der Kredit wird wesentlich früher getilgt.
- Beeinflusst die Währungswahl die mathematische Berechnung?
- Nein. Die Währungsauswahl ändert ausschließlich die Symbolik und landestypische Formatierung. Es findet keine Wechselkursumrechnung statt.