loan interest calculator that shows how much interest

[momofmine]

Does anyone know how to calculate how much interest you would be paying if a loan is taken out at a certain interest rate? I can only find online calculators that calculate hoe much the monthly payments are. I want to know how much interest is being paid.

Also, how would you calculate that yourself? Is it figured monthly? Yearly? So if you take out a loan for $10,000 for five years at 4%, how do you calculate how much interest you pay? And, if you want to pay different amounts each time (like if some months you pay more on it) how do they figure that?

[sunflower.mama]

It would be really hard to do it yourself, as the amount of interest paid changes every month - you pay a tiny bit less interest every month. When you are looking at an online calculator, there is often an additional button that says "calculate amoritization schedule" this is what you want. It shows how much interest you pay each month of the loan, and the total interest paid will appear at the end.

[SeekingJoy]

There are tons of amortization schedule calculator online. Here is one.

If you pay additional payments toward the principal, it will change the ammortization schedule. Just adjust the amortization calculator (i.e XYZ payments left, new balance of $XX,XXX). In essesnce, each additional payment toward the principal will reduce the total amount of interest paid and increase the proportion of all future payments that will be directed toward the principal.

[nd_deadhead]

If all you want to do is calculate the interest over the life of a loan with fixed payment, sit's easy: multiply the amount of the payment by the number of payments and subtract the original loan amount.

In your example of $10,000 at 4% for 5 years, the payment amount is $184.17 per month. The total amount paid is $184.17 times 60 months, or $11,050. $10,000 of that is the loan principal; the remaining $1050 is interest.

I'm pretty handy with spreadsheets, so I write up my own amortization schedules, but as others have siad, there are a lot of these available on-line.

[momofmine]

Thanks all! So how would you calculate it if the person makes a different payment amount each month. Like, if they started off paying $100/month and then increased it when they were able to pay more?

[nd_deadhead]

Can you use a spreadsheet?

If so, label the columns like this:

date, principle, interest, payment

The principle column is the running total of how much you owe, starting with how much you borrowed originally. Each month after that it is the previous month's principal balance, plus the interest for that month, minus the payment.

The interest column is the principle amount times the interest rate (as a decimal, i.e. 5% interest is 0.05), divided by 12 (months in a year).

If the payment is the same every month, you will have 60 rows for a 60-month loan. If you make bigger payments, you will have fewer rows (because you've paid the loan off sooner!)

Sum the numbers in the "interest" column to see how much total interest you will pay with different payment amounts. Making bigger payments has a greater effect early in the loan.

You can do this on paper too, but it takes longer.