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Before you sign the dotted line on a car loan, personal loan, or fixed-rate mortgage, you should know exactly how much money you're going to pay in interest over the life of the loan — because that number is almost always bigger than people expect. A $25,000 car loan at 7.5% APR for 5 years costs $5,053 in interest — you're paying $30,053 for a $25,000 car. This calculator runs the standard amortizing loan formula and gives you the monthly payment, total interest, and total cost. Works for any fixed-rate fully-amortizing loan with monthly payments.

Enter amount, rate, and term.

The amortization formula

Monthly payment formula for a fixed-rate amortizing loan:

M = P × i × (1+i)^n / ((1+i)^n – 1)

Where P = loan amount, i = monthly interest rate (annual rate / 12), n = total number of payments. Every monthly payment splits into interest (on the remaining balance) and principal (paid down). Early in the loan, payments are mostly interest; late in the loan, mostly principal.

Worked example: $25,000 loan at 7.5% APR for 60 months. i = 0.075/12 = 0.00625. Monthly payment = $501. Total paid = $30,053. Interest = $5,053. The first month's interest is $156; the last month's interest is $3. Same payment, very different breakdown.

Strategies to cut total interest

  • Larger down payment: less principal financed = less interest, period.
  • Shorter term: a 15-year mortgage at the same rate cuts total interest in half vs 30-year. Higher monthly payment, but the math is dramatic.
  • Extra principal payments: every extra dollar paid toward principal saves you the interest that dollar would have accrued. On a 30-year mortgage, one extra payment per year cuts ~4 years off the loan.
  • Lower rate (refinance): dropping 1% on a 30-year mortgage saves ~10% in total cost. Worth the closing costs only if you'll stay long enough to break even.
  • Bi-weekly payments instead of monthly: technically 13 monthly payments per year instead of 12, equivalent to one extra payment annually. Same math as the extra-payment strategy.

How to use this calculator

  1. Loan amount: principal being borrowed.
  2. Annual interest rate (%): the APR, not the monthly rate.
  3. Term in years (or override with months).
  4. Output: monthly payment, total interest, total paid.
  5. For mortgages, this is P&I only — add property tax and homeowners insurance (escrowed PITI is the full housing payment).

Common scenarios

$30,000 new car loan at 6.5% APR for 5 years (60 months). Monthly payment $587. Total paid $35,217. Interest $5,217. Manageable on a $60K household income.

$15,000 personal loan at 12% APR for 4 years. Monthly $395. Total paid $18,964. Interest $3,964. Personal loan rates are typically much higher than secured loans — paying off credit card debt with a personal loan at 12% beats keeping the cards at 22%, but it's still expensive money.

$320,000 mortgage at 6.75% for 30 years. P&I payment $2,075. Total paid $747,051. Interest $427,051. You're paying 2.3x the home price over 30 years to interest alone. Add ~$400/month for property tax and insurance escrow = real total housing cost $2,475/month.

FAQ

Why does total interest feel so high? +
Compound interest is brutal at the start of a loan. On a 30-year mortgage at 7%, the first month's payment is roughly 90% interest, 10% principal. It takes about 17 years to cross over to mostly-principal territory. The total interest paid on a 30-year mortgage equals the loan amount or more.
Does this include taxes/insurance? +
No — this is principal + interest (P&I) only. For mortgages, add property tax, homeowners insurance, and possibly PMI (private mortgage insurance if down payment is less than 20%) for the full PITI payment. Property tax: 0.5-2.5% of home value annually. Homeowners insurance: $1,200-3,000/year typical. PMI: 0.5-1.5% of loan annually for those under 20% down.
APR vs interest rate — what's the difference? +
Interest rate is the cost of borrowing the principal. APR includes the interest rate plus origination fees, closing costs, and PMI — it's the total annualized cost of the loan. For comparing loan offers, always compare APR, not interest rate. Two loans at the same rate can have very different APRs based on fees.
Can I deduct mortgage interest on my taxes? +
For mortgages on primary residences and second homes up to $750,000 (post-2017 tax law), interest is deductible if you itemize. Most filers under the 2017 doubled standard deduction don't itemize, so the deduction is moot for them. Auto and personal loan interest is NOT deductible for personal use.
What's the difference between fixed and adjustable rate? +
Fixed: rate locks for the life of the loan. Most predictable. Adjustable (ARM): rate locks for an initial period (5/7/10 years), then adjusts annually based on a market index. ARMs typically start 0.5-1.5% lower than fixed and reset every year after the lock period. Risky if rates rise; lucrative if rates fall. Best for borrowers planning to sell before the adjustment.
Are there prepayment penalties? +
Federal-conforming mortgages (Fannie/Freddie) have no prepayment penalties. Some commercial loans and a few non-conforming residential loans do — read the fine print. Auto loans typically have no prepayment penalties. Personal loans vary by lender; check before signing.
Should I take a longer term for lower payments? +
For mortgages, yes if cash flow is tight — lower payments give you margin. But the total interest cost is dramatic: a $300K 15-year vs 30-year at 7% costs $185K more in interest. Best practice: take the longest term you'll need, but pay extra principal voluntarily when cash flow permits. You can always pay extra; you can't reduce payments without refinancing.
What's the right loan term for a car? +
4 years is the sweet spot — long enough that payments are manageable, short enough that you're not underwater (owing more than the car's worth) for most of the loan. 6 and 7-year car loans look attractive for the lower monthly payment but you'll be upside-down for years and the total interest is brutal. Pay cash if you can.