What is the primary function of an amortization schedule?

The primary function of an amortization schedule is to show each payment breakdown over the loan's duration. An amortization schedule provides a detailed table that lists each payment due over the life of the loan, breaking down how much of each payment goes towards the principal balance versus how much is allocated to interest. This transparency allows borrowers to see their progress in paying down the loan, understand how much interest they are paying over time, and recognize how this changes as the principal balance decreases.

While calculating total interest paid or outlining payment terms are important aspects of understanding a loan, they are not the main purpose of the amortization schedule. Similarly, providing an overview of potential refinancing options falls outside the scope of what an amortization schedule is designed to accomplish, focusing instead on the details of loan repayment.