Amortization is the schedule that spreads loan principal and interest across regular payments so the loan is fully repaid by the end of the term. For fixed-rate installment loans (like many car loans), each monthly payment is the same amount; early payments contain more interest, later payments more principal. The monthly payment depends on principal, the annual interest rate (converted to a monthly rate), and the number of payments. Understanding how to compute or check a monthly payment can help you evaluate offers and determine whether a loan fits your budget. The example below is a common car-loan scenario — the math is straightforward and useful for comparing lenders or pre-qualifications.