Calculate Loan Interest

You may want to calculate loan interest costs as you evaluate loans. Different interest rates, loan terms, and fees can affect your total cost, so it’s important to pick the right loan. You can calculate loan interest with an online calculator or you can do the math yourself.

The easiest way to calculate loan interest is with a calculator or spreadsheet. You’ll get a quick answer detailing interest costs over time, and you can add all the costs together to see what a loan’s total interest cost is. The following pages will help you get an answer without doing much math.

• Loan Amortization Calculator - shows how much interest is in each payment
• Excel Mortgage Calculation Tips - build a spreadsheet showing interest costs

Calculate Loan Interest Costs Yourself

If you do the math yourself, you’ll get a better feel for how a loan works. The best way to understand interest costs is to build an amortization table. You’ll calculate loan interest as a piece of every payment, and you can see how much interest you’ll pay over time.

Assume you borrow $100,000 at 6% for 30 years to be repaid monthly. How much interest will you pay? A sample amortization schedule (showing only the first few payments) appears at the bottom of this page. Total interest paid over the first 3 payments is $1,498.50 ($500 + $499.50 + $499).

• Amortization Calculation - Tips and Example
• What is an Interest Rate?

You’ll see that early payments mostly cover interest costs. Over time, each payment pays off more and more of your loan balance.

Calculate Loan Interest Rates

If you want to calculate a loan’s interest rate - as opposed to interest costs - see How to Calculate Interest Rates.

Sample Amortization Table

Period	Starting Balance	Payment	Periodic Interest	Principal	Remaining Balance
1	100,000	599.55	500	99.55	99,900.44
2	99,900.44	599.55	499.50	100.04	99,800.39
3	99,800.39	599.55	499.00	100.54	99699.84
...	...	...	...	...	...