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
- 「元利均等返済」と「元金均等返済」の違いは何ですか？
- 元利均等返済は毎月の返済額（元金＋利息）が一定で返済計画が立てやすい方式です。一方、元金均等返済は毎月返済する元金が一定で、残高が減るにつれ利息が減るため当初の返済負担が大きいものの、総利息額は元利均等より少なくなります。
- 毎月繰り上げ返済を行うとどのような効果がありますか？
- 繰り上げ返済額はすべて元金の返済に充当されます。元金残高が早く減ることで、以降の利息計算額が大幅に減少し、完済時期を大幅に早めることができます。
- 表示通貨を変更すると計算結果は変わりますか？
- いいえ。通貨設定は記号と桁区切りなどの表記形式を変更するのみで、為替レートによる数値換算は一切行われません。