Loan Interest Calculator
See how much interest a loan costs in total, in the first year and per day.
How loan interest is calculated
Interest each month = remaining balance × monthly rate. Early payments are mostly interest, so the first year costs more than later years. Total interest = payment × number of months − loan amount. Example: $25,000 at 6.5% over 5 years costs about $4,350 in interest.
Frequently asked questions
How is interest on a loan calculated?
Each month, interest is the remaining balance times the monthly rate. The rest of your payment reduces the balance.
How can I reduce total interest?
Choose a shorter term, make extra payments, or lower your rate by refinancing or improving your credit.
Is interest calculated daily?
Many loans accrue interest daily, but the monthly method used here is a close estimate for standard installment loans.
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