Loan Interest Calculator

Calculate the total interest and estimated monthly payment for any loan type.
Assumes payments match compounding.

Loan Repayment Summary

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Estimated Monthly Payment ($)
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Total Interest Paid ($)
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Total Repayment Amount ($)

Financing Insight

This provides the total financial cost of borrowing the **principal amount** over the given **loan term**.

Analyzing Loan Cost with the Loan Interest Calculator

The general **Loan Interest Calculator** uses the **amortization formula** to help you understand the full cost of borrowing money, whether it's a **personal loan**, mortgage, or business loan. By inputting the **principal amount**, **annual interest rate**, and **loan term**, you can quickly find your estimated **monthly loan payment** and the often-surprising figure for the **total interest paid**.

The Amortization Calculation

Similar to the car loan tool, this calculator uses the formula for calculating the payment on a loan with compounding interest. This ensures that the **total interest paid** figure is accurate and reflects the standard way loans are structured, where interest is charged on the remaining **principal amount** throughout the **loan term**.

$$\text{Payment} = \text{Principal} \times \left[ \frac{r(1+r)^n}{(1+r)^n - 1} \right]$$

Where $r$ is the periodic rate and $n$ is the total number of payments. This result provides the necessary data for comparing different loan offers and making sound **financial planning** decisions.

Loan Interest FAQs

What is the difference between simple interest and amortized interest?

**Simple interest** is calculated only on the original **principal amount** ($\text{P} \times \text{R} \times \text{T}$). **Amortized interest** is recalculated each period (usually monthly) based on the current *remaining* balance. Since most loans use amortization, the **Loan Interest Calculator** uses the amortization formula to determine the **total interest paid**.

What does 'Total Repayment Amount' include?

The **Total Repayment Amount** is the sum of the original **principal amount** and the **total interest paid** over the entire **loan term**. It represents the full monetary cost of securing the loan, excluding any external fees.

How does the payment frequency affect the calculation?

The **payment frequency** determines how often interest is compounded. More frequent compounding (e.g., monthly vs. annually) means the interest starts accruing on a slightly lower balance sooner, leading to a small but noticeable change in the final **total interest paid** and the **monthly loan payment**.