Amortisation explained
Understand why early extra payments have compound effect.
In this lesson
Amortisation explained is part of Loan Cost Lab. This preview shows how credit-debt connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Today’s money mission
Imagine this situation: You take a 1000000 in local currency loan at 18% APR for 36 months. Your first monthly payment of 36152 in local currency is split: 15000 in local currency interest, 21152 in local currency principal. Your last payment: mostly principal.
What you need to know
Early extra payments have compound effect. By reducing principal in month 2, you reduce interest in every subsequent month for the loan's duration. A 50,000 in local currency extra payment in month 1 might save 80,000 in local currency+ in total interest.
Real-life example
Real-life money moment: You take a 1000000 in local currency loan at 18% APR for 36 months. Your first monthly payment of 36152 in local currency is split: 15000 in local currency interest, 21152 in local currency principal. Your last payment: mostly principal. Why does the split change? The key lesson is: Amortisation: interest is calculated on the remaining balance.
Progress Penguin connection
Open the linked simulator and test one scenario for “Amortisation explained.” Use this objective: Understand why early extra payments have compound effect. Save the result and explain which input changed the outcome most.
Activity preview
Try the money challenge
Enter the numbers from this lesson's scenario into the loan simulator and verify: early extra payments have compound effect. Change one variable and observe how the total repayment responds.
Try one real money action
Open Tasks and submit proof for one task, or open Requests and make a deposit request. Parent approval can happen later.
Quiz preview
In early loan years, most of your payment goes to:
You take a 1000000 in local currency loan at 18% APR for 36 months. Your first monthly payment of 36152 in local currency is split: 15000 in local currency interest, 21152 in local currency principal. Your last payment: mostly principal. Why does the split change?