How loan amortization works in the Philippines

Most housing, car, and salary loans in the Philippines use fixed monthly amortization. Each payment has two parts: interest (cost of borrowing) and principal (the amount that reduces your outstanding balance). Over time, the interest portion declines while the principal portion grows.

The payment formula

Monthly payment depends on loan amount, term (months), and monthly interest rate. With a fixed-rate loan, the payment is constant and can be computed using the standard annuity formula used by banks and calculators.

Reading a schedule

In the first months, interest is higher because it’s computed on a larger balance. As you pay down the principal, the interest portion shrinks. The final balance reaches zero if you make all payments on schedule.

Practical tips

• Compare APR across lenders, not just monthly payments.
• Check for prepayment penalties and fees.
• Run “what-if” scenarios: longer term lowers payment but increases total interest.

Use our General Amortization Calculator to experiment with different amounts, terms, and rates. For specific government loans, try our new SSS Salary Loan Calculator and Pag-IBIG Housing Loan Calculator tailored for 2026 rates and rules.

Disclaimer: For guidance only. Always verify with official loan agreements.