Loan Interest Calculator: How Much Interest Will I Pay My Lender?
Most of us must borrow money to make a big purchase like a home or car. The cost of borrowing money is called “interest.” Though you usually can’t avoid paying interest on loans, it is possible to minimize the interest paid by maintaining a good credit score, shopping around for the lowest rates and paying down your loan as quickly as possible.
To see how much interest you should expect to pay over the life of your fixed-rate loan, use the calculator below. For example, if you’re going to borrow $20,000 at 5% and repay it over 5 years, enter “$20,000” as the Loan Amount, “5” as the Term, and “5” as the Annual Interest Rate.
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What it Means...
If you borrow $20,000 at 5.00% for 5 years, your monthly payment will be $377.42 and you will pay a total of $2,645.48 over the term of the loan.
It’s important to note that in most cases, your monthly loan payments do not change over time. The loan “amortizes” over the repayment period, meaning the proportion of interest paid vs. principal repaid changes each month. As the loan amortizes, the amount of monthly interest paid decreases while the amount of principal paid increases.