Repayment types compared
Amortized (equal payments)
You pay the same amount every month. Early payments are mostly interest; later ones are mostly principal. This is how most mortgages and car loans work.
Equal principal
You repay the same slice of principal each month plus interest on what is left, so the first payment is the largest and payments shrink over time. Total interest is lower than with equal payments.
Interest-only
You pay only interest during the term and the full principal at the end. Monthly payments are smallest, but total interest is highest.
The formula
With monthly rate r = annual rate ÷ 12 and n monthly payments, the amortized payment is P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1).
Lenders may calculate interest daily, round differently, or add fees, insurance and taxes, so actual payments can differ slightly.