Early payments are mostly interest and late payments are mostly principal, which surprises many borrowers. Seeing the whole table makes loan offers easier to compare, and gives lenders and borrowers a shared reference for what should be outstanding at any point.
How it is calculated
Each period: interest = balance × r; principal = M − interest; new balance = balance − principal
M is the fixed payment, from the amortized loan formula M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1).
r is the periodic interest rate — the annual rate divided by 12 for monthly payments.
Interest for a period is charged on the balance at the start of that period, so it shrinks as the debt shrinks.
Principal is whatever remains of the payment after interest, so it grows each period.
Repeating the three steps for all n periods produces the schedule, ending at a balance of zero.
Example
Take a 200,000 THB loan at 6% per year (0.5% per month) over 12 months. The fixed payment is 17,213.29 THB. In month 1, interest is 200,000 × 0.005 = 1,000 THB, so 16,213.29 THB goes to principal, leaving 183,786.71 THB owing.
In month 2, interest falls to 183,786.71 × 0.005 = 918.93 THB and the principal portion rises to about 16,294.36 THB, leaving roughly 167,492.36 THB. The pattern continues until the balance reaches zero, with total interest of about 6,559.43 THB over the year (final figures vary by a few satang due to rounding).
Understanding your result
Attach the schedule to the loan or installment agreement. When both parties sign a table of dates, amounts, and balances, questions like “how much is left?” have a written answer instead of two conflicting memories.
The interest column shows where extra payments help most: paying extra early in the term cancels far more future interest than the same amount paid near the end.
The balance column doubles as a settlement reference — if the borrower wants to pay everything off in month 7, the row for month 7 is the starting point for that conversation.
Frequently asked questions
Why does so much of my early payment go to interest?
Interest is charged on the outstanding balance, which is largest at the start. With a big balance, interest eats most of the fixed payment and little is left for principal. As the balance falls, the interest charge falls with it, and the principal share of each identical payment grows.
What is the difference between an amortization schedule and a payment schedule?
A payment schedule lists dates and amounts due. An amortization schedule adds the internal breakdown — interest, principal, and remaining balance per payment. For agreements, a payment schedule is usually enough; the amortization table is what you consult for payoff amounts and interest questions.
Does an extra payment change the schedule?
Yes. An extra payment reduces the balance immediately, so every subsequent interest charge is smaller. Depending on the agreement, that either shortens the loan or lowers the recalculated payment. Regenerate the schedule after any extra payment so both sides work from the same numbers.
Why doesn't my final payment match the others exactly?
Rounding. Each payment is rounded to the nearest satang, and tiny differences accumulate across the term. Most schedules adjust the last payment by a few satang so the balance lands on exactly zero — a normal practice worth mentioning in the agreement.
Can I use this for an informal loan with a relative?
Yes, and it is often the fairest approach: the borrower sees they are not being overcharged, and the lender can verify the balance at any time. For very simple family loans, a flat split via an installment calculator may be easier to explain than amortization.
What does “amortization” actually mean?
It comes from a word meaning to gradually extinguish. An amortized loan is designed so that equal payments fully extinguish the debt by the final payment — nothing ballooning at the end, no balance left over.
Results are estimates for general information only and may differ from a lender's exact figures. They are not financial or legal advice.