When you take out a loan, the total amount you repay consists of two main components: the principal and the interest. The principal is the original amount of money borrowed. Interest is the cost of borrowing that money, typically expressed as a percentage of the principal over a certain period.
Loans are usually repaid through regular installments (e.g., monthly). Each payment you make goes towards reducing the outstanding principal balance and covering the interest accrued since the last payment. In most standard loan structures (like amortizing loans), the proportion of your payment that goes towards interest is higher at the beginning of the loan term and gradually decreases over time, while the proportion going towards the principal increases.
How the Calculator Works
This calculator helps you estimate the total interest you will pay over the life of a loan and the total amount you will repay. It uses the standard loan amortization formula to determine this.
Loan Amount (Principal): The initial sum borrowed.
Annual Interest Rate: The yearly rate charged by the lender. This is converted to a monthly rate for calculations.
Loan Term (Years): The total duration of the loan. This is converted to months for calculations.
The core calculation involves determining the fixed periodic payment (usually monthly) first. The formula for the monthly payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
n = Total number of payments (Loan Term in Years * 12)
Once the monthly payment is calculated, the total interest paid is found by subtracting the original principal from the total amount paid over the life of the loan (Monthly Payment * Number of Payments).
Total Interest = (M * n) - P Total Amount Paid = M * n
Use Cases
Loan Comparison: Understand the true cost of different loan offers (e.g., personal loans, auto loans, mortgages) by comparing the total interest payable.
Financial Planning: Estimate how much interest you'll pay on a future loan to better budget your finances.
Debt Reduction Strategy: Visualize the impact of loan terms on the total interest burden.
Disclaimer: This calculator provides an estimate for informational purposes only. Actual loan costs may vary based on specific lender terms, fees, and payment schedules.
function calculateInterestPrincipal() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("result");
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || loanAmount <= 0 || annualInterestRate < 0 || loanTermYears <= 0) {
resultDiv.style.display = "block";
resultDiv.style.backgroundColor = "#dc3545"; // Red for error
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = (annualInterestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPayment;
if (monthlyInterestRate === 0) {
monthlyPayment = loanAmount / numberOfPayments;
} else {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
var totalInterestPaid = (monthlyPayment * numberOfPayments) – loanAmount;
var totalAmountPaid = monthlyPayment * numberOfPayments;
resultDiv.style.display = "block";
resultDiv.style.backgroundColor = "var(–success-green)"; // Reset to green
resultDiv.innerHTML =
"Total Interest Paid: $" + totalInterestPaid.toFixed(2) + "" +
"Total Amount Paid: $" + totalAmountPaid.toFixed(2) + "";
}