Personal Finance
Loan Interest Calculator
Borrowing always has a price. See the total interest, monthly cost, and the real cost of that loan before you sign.
Loan interest is the cost of borrowing, calculated as principal × rate × time. Total payment on a $1,000 loan at 6% for 12 months equals the principal plus the interest. APR expresses the yearly cost with fees included.
Simple interest = P × r × t.
APR includes fees, compare APRs, not rates.
Shorter terms = less total interest.
Calculate Your Loan Interest
Total Interest
What Is Loan Interest?
Simple interest charges the rate on the original principal for the time borrowed. Many personal and payday-style loans work this way; mortgages and auto loans amortize instead.
The APR, which folds in fees, is the number to compare across offers. A lower nominal rate with high fees can cost more.
How It Is Calculated
Interest = principal × annual rate × (months ÷ 12)
Example: Example: $10,000 at 8% for 24 months → $1,600 interest, $11,600 total
What different APRs cost on $10,000 / 2 years
| APR | Total interest |
|---|---|
| 5% | $1,000 |
| 10% | $2,000 |
| 20% | $4,000 |
| 36% (payday-style) | $7,200 |
Limitations
- Doesn't model fees, which APR captures.
- Amortizing loans cost less in interest than simple-interest math shows.
- Revolving credit (cards) compounds, use the payoff calculator instead.
Sources & Review
References used for this calculator’s formulas and thresholds:
Loan Interest FAQ
How is loan interest calculated?
Simple interest: principal × rate × time. $10,000 at 8% for 2 years = $1,600.
What is APR vs interest rate?
APR includes fees (origination, points) spread over the term, always compare APRs, not headline rates.
How do I pay less interest?
Shorter term, larger payments, better credit score, in that order of impact.
Is paying a loan off early worth it?
Usually, simple-interest loans charge less when paid sooner. Check for prepayment penalties first.
Please read this first: these results are educational estimates. For real decisions, talk to a qualified professional.