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Fixed Principal Payment Loan Calculator

Includes a printable amortization schedule and charts.

What is a fixed principal loan?

Fixed Principal Loan Calculator
Fixed Principal Loan Calculator

Fixed Principal Payment Loan

  • A loan characterized by a declining payment.
  • Amount allocated to principal is the same for each payment.
  • Less total interest than "normal," level payment loans.

A fixed principal loan is a loan where the borrower repays a fixed amount of the principal loan amount each period until they have fully paid off the loan. The interest on the loan is calculated based on the unpaid principal balance, which decreases over time as the borrower makes principal payments. A declining periodic payment due to a decreasing interest amount is one of the characteristics of a fixed principal loan.

In contrast, a traditional loan has fixed (sometimes called "level") periodic payments comprised of increasing principal and declining interest. The principal amount paid each period increases (to keep the same payment) because the interest amount decreases due to the declining principal balance.

Why are fixed principal loans advantageous to borrowers?
Fix principal payment loans reduce the interest amount paid because the borrower pays the principal loan amount off faster than they would if they had a traditional loan.

The Calculator-Calculate a Payment Schedule Using a Fixed Principal Amount

Required user inputs and results for the fixed principal loan calculator.
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Instructions for the fixed principal calculator

Enter the four primary inputs:

  • Loan Amount: Enter the total amount of the loan you wish to take out. This should be entered as a positive number.
  • Number of Payments: Enter the total number of payments you will make to pay off the loan. This should be entered as a positive whole number.
  • Annual Interest Rate: Enter the annual interest rate for the loan, expressed as a percentage. For example, if the annual interest rate is 5%, you would enter "5" for this field.
  • Payment Amount: Enter the amount of each payment you will make to pay off the loan. This should be entered as a positive number.

These secondary inputs must all be set. If you are not sure about any of them, we suggest that you leave them set to their default setting.

  • Payment Frequency: Select the frequency of payments you will make to pay off the loan. This can be monthly, bi-weekly, weekly, or other intervals.
  • Compounding: Select the compounding frequency of the loan. This is the frequency at which the interest is calculated and added to the loan balance. If the loan documents do not specify a compounding frequency or you don't know it, then set it to be the same as the payment frequency.
  • Payment Method: Select the payment method you will use to pay off the loan. If the first payment is due when the loan originates set this option to "Advance." Otherwise, we'll assume the first payment is due one period after the origination date (when the funds are available) and in that case, this must be set to "Arrears."

Related: These calculators also support "fixed principal" style loans and they are more feature rich as well. For example, with many you can set the dates and/or add extra payments.

If you try one of the above, just set the "Amortization Method" to "Fixed Principal."

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