Loan payment and total interest
Amount, rate and term give the monthly payment and the full cost, for a mortgage, car or personal loan.
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Leaves out lender fees, insurance and other charges. The payment is exact, so a lender that rounds each payment to the cent will differ by a few cents.
Year by year
| Year | Interest | Principal | Balance at end |
|---|
Month by month
| Month | Payment | Interest | Principal | Balance |
|---|
How to work out what a loan costs
- Enter the amount you borrow, the annual interest rate and the term in years or months.
- Add an extra monthly payment if you plan to make one.
- Read the monthly payment and the total interest, then open the year-by-year schedule.
Questions
How is the monthly payment worked out?
With r as the monthly rate (annual rate ÷ 12 ÷ 100) and n as the number of payments, the payment is P × r ÷ (1 − (1 + r)^−n). For 200,000 at 6% over 30 years it is 1,199.10 a month.
Why is so much of the early payment interest?
Interest is charged on the balance still owed. While the balance is high, most of each payment is interest, and the share that reduces the balance grows each month.
Does the result include fees and APR?
No. It covers the loan amount and the interest only. Lender fees and insurance are left out. The APR includes some fees, so it is usually higher than the interest rate used here.
How much does an extra payment save?
An extra payment goes straight to the balance, so less interest builds up and the loan ends sooner. Check that the lender applies extra payments to the principal.