Equal Principal Loan Calculator

How equal principal works

With equal principal the amortisation part is the same every month: the loan amount is divided by the number of months. Interest, however, is always charged on the remaining balance, so it shrinks with each payment.

Because the interest portion falls, the total payment (principal plus interest) keeps decreasing. That is why the first payment is the largest and the last one the smallest.

What you enter and what you get

Enter the loan amount, the annual interest rate and the term in years. The calculator returns the fixed monthly principal, the first and last monthly payment, the accrued total interest and the total repaid.

For a 120,000 dollar loan over twenty years, the principal slice would be identical each month, while the first payment would be noticeably higher than the last as interest weighs on the early years.

Equal principal vs annuity

An equal principal loan costs more at the start than an annuity, but the total interest ends up lower because the balance falls faster early on.

It is worth comparing if the larger early payment fits your budget. Over a long term the interest saved can be substantial.

Good to know

The result is an estimate. Real costs are also affected by rate changes, possible arrangement and account fees, and reference rate movements, none of which are included here.