Why early payments barely dent the balance
Interest is charged on the outstanding balance, which is largest at the start. On a 250,000 loan at 7% over 15 years, the first month's interest is about 1,458 out of a payment near 2,247, so barely a third reduces the debt.
By the final year that reverses almost completely, with nearly the entire payment going to principal. The schedule below shows exactly where your crossover point falls.
What to do with this information
Two practical uses. First, any prepayment made early removes principal that would otherwise generate interest for the entire remaining term, so early extra payments are worth far more than late ones. Second, if you plan to sell or refinance in a few years, the schedule tells you how little equity you will actually have built.
Frequently asked questions
Why does the schedule cap at 360 months?
Thirty years covers virtually all consumer loans and keeps the table readable. Longer terms still calculate correctly in the summary figures.
Does this handle extra payments?
Not here. Use our loan prepayment calculator, which models extra monthly principal and shows the interest and time saved.
Why does my lender's schedule differ slightly?
Day-count conventions, payment dates and rounding rules vary between institutions. Differences should be small, typically a currency unit or two per month.
What is the crossover point?
The month when principal first exceeds interest within a single payment. On typical long loans it arrives around two thirds of the way through the term.
Can I use this for a car loan?
Yes. Any fixed-rate amortized loan works, including car, personal, education and business loans.
Does it include fees or insurance?
No. It models principal and interest only. Add processing fees and insurance separately when comparing real offers.