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Loan Interest Calculator
Find out how much a loan really costs in interest. Enter the amount, rate and term, then press Calculate to see the monthly payment, the total interest and how each payment splits between interest and principal.
Written by TopicDrill Editorial Team·Updated June 2026
Cumulative interest vs principal paid
Interest Principal
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How the loan interest calculator works
The tool first solves for the single fixed payment that will clear your balance over the term. It then walks the loan one month at a time. For each month it charges interest on whatever you still owe, applies the rest of your payment to the principal, and keeps a running total of the interest. That month-by-month walk is what makes the total accurate rather than a rough estimate.
The chart plots two running totals: the interest you have paid and the principal you have repaid. Early on the interest line climbs faster, then it flattens as the principal line takes over. The point where they cross is roughly when you start owning more than you owe in interest.
A quick example
Borrow $20,000 at 7.5% for 5 years and the payment lands near $401 a month. Over the full term you repay about $24,040, which means roughly $4,040 of that is pure interest. Stretch the same loan to 7 years and the monthly payment drops, but the total interest climbs because the balance lingers longer.
Things to keep in mind
The figures assume a fixed rate and that you never miss or skip a payment. Variable-rate loans can move up or down, and late payments add fees on top. For a plain-language guide to how loan interest accrues, see Investor.gov on interest. If you might pay late, estimate the penalty with our loan late payment calculator.
Frequently asked questions
How is the interest on a loan calculated each month?
Each month the lender charges interest on the balance that is still owed. Multiply the remaining balance by the monthly rate, which is the annual rate divided by twelve. Whatever is left of your fixed payment after covering that interest goes toward shrinking the principal, so the interest portion falls a little every month.
Why does so much of an early payment go to interest?
At the start the balance is at its largest, so the interest charge is at its largest too. The fixed payment barely makes a dent in principal in the first months. As the balance falls the interest charge falls with it, and a growing share of each payment chips away at the principal. The chart on this page shows that shift clearly.
What is the formula for total interest?
First find the fixed monthly payment using the amortization formula, then multiply that payment by the number of months to get everything you pay. Subtract the original amount borrowed and what remains is the total interest. With a zero rate the total interest is simply zero and the payment is the amount divided by the number of months.
Will paying extra each month reduce the interest?
Yes, and often by a surprising amount. Any extra money goes straight to principal, which lowers the balance that future interest is charged on. That shortens the loan and can save a large share of the interest, especially early on when the balance is high.
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