📖 Overview
Use this tool to evaluate whether the loan cost matches the benefit of borrowing.
⚙️ How It Works
This formula estimates total borrowing cost by subtracting principal from total payments across a 60-month term.
The Formula
Total Interest = (Monthly Payment × 60) − Principal
| Monthly Payment | Fixed payment from amortization formula |
| 60 | Number of months in a 5-year term |
| Principal | Original loan amount |
💡Total interest is the true cost of borrowing. A loan with a lower monthly payment but higher rate can end up costing thousands more overall.
Quick Reference
| Loan | 3% | 6% | 9% | 12% |
|---|---|---|---|---|
| $10,000 | $779 | $1,600 | $2,457 | $3,347 |
| $20,000 | $1,558 | $3,200 | $4,913 | $6,693 |
| $30,000 | $2,337 | $4,800 | $7,370 | $10,040 |
Practical Tips
💡 Use total interest to compare whether borrowing is worth the purchase.
💡 A small APR drop can reduce total interest significantly.
💡 Re-check this estimate if your term length changes.
Frequently Asked Questions
❓ Why is total interest important?
It shows the real cost of financing beyond the headline monthly payment.
❓ Can I lower this number?
Yes, with lower rates, shorter terms, or extra principal payments.