Total Loan Interest Calculator
Calculate the total interest you'll pay over the life of a loan. Understand the true cost of borrowing money.
Result
- Loan Amount
- $0.00
- Interest Rate
- 0% per year
- Loan Term
- 0 months (0 years)
- Monthly Payment
- $0.00
- Total of All Payments
- $0.00
- Total Interest
- $0.00
- Interest as % of Principal
- 0.0%
Formula & Guide
Formula
I
Total Interest
Total Interest = (PMT × n) - P
Sum of payments minus principal
%
Interest Percentage
Interest % = (Total Interest / P) × 100
Interest as percentage of loan
Formula Variables
PMT
Monthly Payment
Fixed monthly payment amount
n
Term
Total number of monthly payments
P
Principal
Original loan amount
Step-by-Step Scenario
Example: 30-Year Mortgage
Loan Amount
$250,000
Interest Rate
7%
Term
30 years (360 months)
1
Calculate Monthly Payment
- PMT = $1,663.26
2
Calculate Total Payments
- $1,663.26 × 360 = $598,773.60
3
Calculate Total Interest
- $598,773.60 - $250,000 = $348,773.60
- That's 139.5% of the original loan!
Additional Examples
15-Year Mortgage
Loan Amount: $250,000
Rate: 6.5%
Term: 15 years
Monthly Payment
$2,177.77
Total Interest
$141,999
30-Year Mortgage
Loan Amount: $250,000
Rate: 7%
Term: 30 years
Monthly Payment
$1,663.26
Total Interest
$348,774
Understanding Total Interest
Longer Terms Cost More
Extended loan terms result in significantly more total interest, even if monthly payments are lower.
Rate Impact
Small interest rate differences compound over time. A 0.5% lower rate can save thousands over the loan life.
Extra Payments Save
Making additional payments reduces principal faster, which decreases total interest paid over time.
Compare Total Cost
Don't just look at monthly payments. Compare total interest to understand the true cost of borrowing.
Important Notes
- On long-term loans, total interest can exceed the original loan amount significantly.
- Shorter loan terms result in less total interest, even with higher monthly payments.
- Making extra payments reduces principal faster, which decreases total interest over time.
- Compare total interest costs, not just monthly payments, when evaluating loan options.
Frequently Asked Questions
Common questions about loan interest.
Total interest is calculated by subtracting the original loan amount from the sum of all payments. Total Interest = (Monthly Payment × Number of Months) - Principal. This gives you the total cost of borrowing over the entire loan term.
Mortgages have long terms (15-30 years) and compound interest. Even at low rates, interest accumulates over decades. For example, a $300,000 mortgage at 6.5% for 30 years costs about $383,000 in interest—more than the home price!
Several strategies reduce total interest: 1) Choose a shorter loan term, 2) Make extra principal payments, 3) Refinance at a lower rate, 4) Make biweekly payments instead of monthly (results in 13 payments/year), 5) Put more money down upfront.
Even small rate differences have huge impacts over time. On a $300,000 30-year mortgage, reducing the rate from 7% to 6% saves about $70,000 in total interest. Always shop around for the best rate.