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Every fixed loan payment is split between interest and principal, and that split shifts over time — early payments go mostly toward interest, with more shifting to principal as the balance shrinks.
This calculator shows exactly how your first payment (and your first year) splits between interest and principal, for any loan type.
How it works
Enter the loan amount, rate, and term. The calculator computes the fixed monthly payment, then simulates the first 12 payments to show how much total interest and principal you'll pay in year one, plus the exact split on your very first payment.
- Enter loan amount.
- Enter annual interest rate (%).
- Enter loan term (years).
- Click Calculate to see your results.
Examples
$20,000 loan, 7%, 5 years
A $20,000 loan at 7% over 5 years has a $396.02 monthly payment — the first payment splits into $116.67 interest and $279.35 principal, with $1,290.33 total interest paid across year one.
Who should use it
- Understanding how much of an early loan payment actually reduces the balance.
- Comparing how a shorter loan term shifts more of each payment toward principal sooner.
Industry applications
- Personal finance education
- Mortgage and lending consultation
Advantages
- Breaks down both the first payment and the full first year of payments.
- Works generically for any fixed-rate installment loan, not just mortgages.
Limitations
- Only reports year 1 in detail — doesn't generate a full payment-by-payment schedule for the entire loan term.
Common mistakes to avoid
- Assuming your loan balance drops in a straight line — it doesn't, since more of each payment goes to principal only as time passes.
- Expecting the interest/principal split to be the same in year one as it will be near the end of the loan.
Best practices
- If you're considering extra principal payments, remember they have the most impact early in a loan's life, since more of your fixed payment is going to interest at that point.
Tips
- A shorter loan term (even at the same rate) dramatically increases how much of your first payment goes to principal — a useful comparison to run alongside a longer-term quote for the same loan amount.