Loan Interest Calculator

Calculate periodic loan payments, total interest paid, total repayment, and effective annual rate for a fixed-rate loan.

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Enter loan details Provide a loan amount, annual rate, and term above to see the periodic payment, total paid, total interest, and effective annual rate.

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Borrowing Cost

Loan interest calculator guide: total interest paid, repayment cost, and effective annual rate

A loan interest calculator is for the borrowing-cost question rather than the affordability question. Instead of focusing only on whether the payment fits your budget, it shows how much interest the loan will add over the full term, what the total repayment will be, and how the effective annual rate changes when payments are made more often than monthly.

What this calculator is measuring

A fixed-rate loan has two stories at once: the payment per period and the lifetime borrowing cost. A loan interest calculator makes the second story easier to see by separating total paid, total interest, and annualised cost. That is useful when two loans have similar-looking payments but different repayment terms or fee structures.

This page works best as a planning calculator for amortising loans where the rate stays fixed for the full term. It is most useful when you want to understand how much of the repayment stream is principal and how much is finance cost over time.

Core loan-interest formulas

The scheduled payment still comes from the standard amortisation formula. Once the periodic payment is known, the total paid is the sum of all payments and the total interest is the excess over the original principal. The effective annual rate converts the periodic rate into a one-year figure that makes different payment frequencies easier to compare.

That means the calculator is doing two linked jobs: solving for the periodic payment and then translating that payment pattern into a full-term cost view.

M = P x r / (1 - (1 + r)^(-n))

M is the scheduled payment, P is the original loan amount, r is the periodic interest rate, and n is the total number of payments.

Total interest = Total paid - Principal

Once the full repayment stream is known, interest is the portion paid above the amount originally borrowed.

EAR = (1 + periodic rate)^(periods per year) - 1

The effective annual rate converts the periodic borrowing cost into an annualised figure for easier comparison.

Why term and payment frequency matter

A longer term usually reduces the payment per period but increases the total interest because the balance remains outstanding for longer. A shorter term does the opposite: the payment rises, but the interest cost often falls sharply. That is why payment size should never be read without the total-interest figure beside it.

Payment frequency changes the shape of the repayment stream too. Monthly, biweekly, and weekly schedules can create slightly different effective annual costs and total repayment outcomes because interest is being charged and principal is being reduced on different timing assumptions.

How to use the result well

Use the periodic payment to check affordability, then use total interest and total paid to compare borrowing cost across offers. If you are choosing between similar rates or terms, the total-interest view is often what reveals which loan is actually cheaper.

This tool still simplifies reality. Fees, late charges, variable rates, promotional periods, and lender-specific payment processing rules can all change the actual cost, so the result should be treated as an educational estimate rather than a lending quote.

Frequently asked questions

What is the difference between loan payment and total loan interest?

The loan payment is the amount due each period. Total loan interest is the full finance cost across the whole term after all scheduled payments are added together and the original principal is subtracted.

 Why can two loans with similar payments have different total interest?

Because the term and payment frequency matter. A loan can keep the payment low by stretching repayment across more periods, which usually causes more interest to accrue over time even if the periodic payment looks attractive.

 What does effective annual rate mean here?

Effective annual rate converts the periodic borrowing cost into a one-year rate that reflects compounding across the chosen payment schedule. It is useful when you want one annualised figure for comparing payment frequencies.

 Does this calculator include fees or penalties?

No. This version focuses on fixed-rate loan interest, payment size, and total repayment. Origination fees, prepayment penalties, and other product-specific charges need to be reviewed separately in the lender disclosure.

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