Formula
Loan interest formula
Monthly interest = remaining balance x annual rate / 12; total interest = sum of monthly interest chargesThe calculator uses an amortized monthly payment, then adds each month's interest until the loan is paid off.
Loan Interest Calculator
Use this loan interest calculator to estimate how much interest a loan may cost over time and how extra payments can reduce it.
Planning estimate
Live calculator
Loan interest
Total interest$4,331.67
Estimated over 60 monthly payments.
Monthly payment$405.53
$405.53 required payment plus extra payment.
Total paid$24,331.67
Principal plus estimated interest.
Interest saved$0.00
Compared with making only the scheduled payment.
How the interest estimate works
This estimate uses an amortized monthly payment. Each payment first covers accrued interest, then reduces principal. Extra payments reduce principal faster and can cut interest over the life of the loan.
Loan interest summary
Quick view of the payment schedule and interest cost.
| Measure | Estimate |
|---|---|
| Loan amount | $20,000.00 |
| Scheduled term | 60 months |
| Payoff time | 60 months |
| Total interest | $4,331.67 |
| Total paid | $24,331.67 |
Interest by year
Annual principal, interest, and remaining balance.
| Year | Principal | Interest | Ending balance |
|---|---|---|---|
| Year 1 | $3,388.80 | $1,477.53 | $16,611.20 |
| Year 2 | $3,670.07 | $1,196.26 | $12,941.13 |
| Year 3 | $3,974.69 | $891.65 | $8,966.44 |
| Year 4 | $4,304.58 | $561.75 | $4,661.86 |
| Year 5 | $4,661.86 | $204.47 | $0.00 |
Use this as a planning estimate. Taxes, fees, rates, account terms, provider policies, local rules, and timing can change real-world results.
How to use
Steps
- Enter the amount borrowed.
- Enter the annual interest rate and loan term.
- Add an optional extra monthly payment.
- Compare total interest, total paid, payoff time, and yearly interest.
Example
Sample calculation
Loan amount$20,000
Rate and term8% for 5 years
Monthly payment$405.53
Total interest$4,331.67
Calculator use
Best for
- Estimating affordability, payment, payoff, interest, APR, refinance, rent, or debt scenarios before a money decision.
- Comparing terms, rates, balances, fees, taxes, insurance, debt payments, or split shares with assumptions visible.
Before relying on it
Check first
- Treating an estimate as an approval, quote, credit decision, payoff statement, tax result, or legal payment obligation.
- Leaving out fees, escrow, insurance, property tax, PMI, minimum payments, compounding, promotional rates, or local rules.
- Comparing scenarios with different time horizons, upfront costs, credit assumptions, or one-time versus monthly costs.
Details
What to know before using the result
Amortized loansInterest changes monthly
Early payments usually carry more interest because the remaining balance is larger. Later payments shift more toward principal.
Extra paymentsPrincipal reduction
Extra principal payments can reduce the balance faster, which can reduce future interest if the lender applies them to principal.
Cost scopePrincipal and interest
This estimate does not include origination fees, late fees, taxes, insurance, or other charges unless you add them to the loan amount.
Source notes
References used for this calculator
Benchmarks
How to read the result
Short term: Less interest.
Shorter terms usually cost less interest but require higher monthly payments.
Long term: Lower payment.
Longer terms can lower the payment but usually increase total interest.
Extra principal: Interest lever.
Even small extra payments can reduce interest when they consistently lower principal.
Calculator accuracy
Methodology and assumptions
Formula, inputs, limitations and review record
Formula
Monthly interest = remaining balance x annual rate / 12; total interest = sum of monthly interest charges
Inputs used
Loan amount, Interest rate, Term years, Extra payment
Limitations
Money results are planning estimates. Actual taxes, account terms, rates, fees, timing, local rules, and provider policies can change the real-world result.
Review record
Catalog QA baseline on June 6, 2026. This date marks the catalog-wide automated and editorial QA baseline, not a tool-specific expert review.
Cite this page
Toolkit Shelf. Loan Interest Calculator. https://toolkitshelf.com/tools/loan-interest-calculator
FAQ
Common questions
How do I calculate loan interest?
For an amortized loan, each month multiplies the remaining balance by the monthly interest rate, then the rest of the payment reduces principal.
Why is interest higher early in a loan?
Interest is based on the remaining balance. The balance is largest early, so the interest portion is usually larger early.
Do extra payments reduce interest?
They can if the lender applies them to principal. Lower principal means less future interest accrues.
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