How Much Interest Will I Pay on My Loan? Total Cost by Loan Type
The monthly payment is the number most people focus on when taking out a loan. The total interest paid over the life of the loan is the number that actually matters — and it's almost always much larger than expected.
Use the Loan Payoff Calculator to see exactly how much interest your current loan will cost over its full term, and how much extra payments would save. This article walks through the total interest math for the most common loan types.
The Basic Formula for Total Interest
For a fully amortizing loan with fixed payments, total interest paid is:
Total interest = (Monthly payment × Number of payments) − Principal
Example: A $25,000 car loan at 7% over 60 months has a monthly payment of $495. Total paid: $495 × 60 = $29,700. Total interest: $29,700 − $25,000 = $4,700.
The formula is simple, but the numbers for larger loans or longer terms get large quickly. A 30-year mortgage often has total interest costs that exceed the original loan amount.
Mortgage: The Largest Interest Cost Most People Carry
Mortgages have long terms — typically 15 or 30 years — which means interest compounds significantly even at moderate rates. The total interest on a 30-year mortgage typically runs between 70% and 120% of the original loan amount depending on the interest rate.
Total interest at different rates on a $350,000 mortgage:
| Interest rate | Monthly payment | Total interest (30 yr) | Total paid |
|---|---|---|---|
| 5.0% | $1,879 | $326,395 | $676,395 |
| 6.0% | $2,098 | $405,359 | $755,359 |
| 7.0% | $2,329 | $488,369 | $838,369 |
| 7.5% | $2,447 | $531,021 | $881,021 |
| 8.0% | $2,568 | $574,413 | $924,413 |
At 7%, you pay $488,000 in interest on a $350,000 loan — nearly 140% of what you borrowed. The interest is also heavily front-loaded: in the first year of a 7% 30-year mortgage, approximately 83% of each payment goes to interest, not principal.
15-year vs 30-year mortgage comparison ($350,000 at 7%):
| Term | Monthly payment | Total interest | Difference |
|---|---|---|---|
| 30 years | $2,329 | $488,369 | — |
| 15 years | $3,145 | $216,094 | $272,275 saved |
The 15-year mortgage costs $816/month more but saves $272,000 in total interest. Whether that trade-off makes sense depends on your cash flow, other financial priorities, and opportunity cost — but the interest savings are substantial.
Car Loans: Short Term, Moderate Interest
Car loans are typically 48–84 months at rates that currently range from 5% to 14%+ depending on credit score and lender.
Total interest on a $30,000 car loan at different rates and terms:
| Rate | 48 months | 60 months | 72 months |
|---|---|---|---|
| 5% | $3,148 | $3,968 | $4,802 |
| 7% | $4,436 | $5,598 | $6,790 |
| 10% | $6,398 | $8,084 | $9,832 |
| 14% | $9,150 | $11,612 | $14,155 |
A $30,000 car loan at 14% over 72 months costs $14,155 in interest — nearly half the car's price. Extending the loan term from 48 to 72 months reduces the monthly payment but significantly increases the total interest paid.
There's another risk with long car loan terms: depreciation. A car depreciating faster than the loan balance is paid down creates negative equity — you owe more than the car is worth. This becomes a problem if the car is totaled or you need to sell before the loan is paid off.
Personal Loans: Higher Rates, Shorter Terms
Personal loans typically run from 2 to 7 years at rates of 8%–30% depending on creditworthiness. Because personal loans are unsecured (no collateral), rates are higher than secured loans.
Total interest on a $15,000 personal loan:
| Rate | 3 years | 5 years |
|---|---|---|
| 8% | $1,934 | $3,242 |
| 12% | $2,929 | $4,929 |
| 18% | $4,462 | $7,537 |
| 25% | $6,334 | $10,773 |
At 25% over 5 years, you pay $10,773 in interest on a $15,000 loan — 72% of the original amount. For personal loans at high rates, aggressive early payoff is almost always the right financial move.
The Loan Payoff Calculator lets you model what happens if you pay an extra $100, $200, or $500 per month — you can see in seconds how much interest you save and how many months earlier you'd be done.
Student Loans: Long Terms and Capitalized Interest
Federal student loans in the US have rates that vary by loan type and disbursement year, ranging from roughly 5% to 8% for undergrad and higher for graduate loans. Many borrowers have multiple loans from different years at different rates.
The complexity with student loans is capitalized interest — unpaid interest that gets added to the principal balance, creating a larger balance that future interest is then calculated on. This most often happens during deferment, forbearance, or income-driven repayment plans where monthly payments don't cover the full interest accruing.
Example of capitalization: A $35,000 loan at 6% during a 3-year deferment (grad school) accrues $6,300 in interest that capitalizes. Now you owe $41,300, and the 6% interest applies to the higher balance going forward. The total cost of the loan increases significantly even though you made no payments.
Total interest on $40,000 in federal student loans at 6.5%:
| Repayment plan | Term | Monthly payment | Total interest |
|---|---|---|---|
| Standard | 10 years | $454 | $14,417 |
| Extended | 25 years | $270 | $40,982 |
| Aggressive (+$200/mo) | ~7 years | $654 | ~$9,800 |
Switching from the standard 10-year plan to extended repayment saves $184/month but costs an additional $26,000 in interest. Paying $200 extra per month on the standard plan saves roughly $4,600 in interest and pays off 3 years early.
How Prepayment Reduces Total Interest: The Math
Every extra dollar paid on a loan's principal reduces the balance that future interest accrues on. The earlier in the loan term you make extra payments, the more cycles of interest you eliminate, and the greater the compounding savings.
Extra payment impact on a $300,000 mortgage at 7% over 30 years:
| Extra payment | Total interest saved | Payoff time saved |
|---|---|---|
| $50/month | ~$14,000 | ~1.3 years |
| $100/month | ~$26,000 | ~2.5 years |
| $200/month | ~$47,000 | ~4.5 years |
| $500/month | ~$98,000 | ~9 years |
| $1,000/month | ~$154,000 | ~14 years |
The savings are non-linear because each extra dollar reduces the principal faster, which reduces the interest base for all subsequent months. $1,000/month extra saves more than 20× what $50/month saves, even though it's 20× the dollar amount, because the compounding effect amplifies over more months.
Which Loan to Pay Off First
If you have multiple loans, the right payoff order depends on whether you're optimizing for math or motivation.
Mathematical optimum (avalanche): Pay off highest-rate debt first. Direct all extra payments to the loan with the highest interest rate while paying minimums on others. When it's paid off, roll the freed-up payment to the next highest-rate loan.
If you have a credit card at 22%, a personal loan at 12%, a car loan at 7%, and a mortgage at 6.5%, the order is: credit card, personal loan, car loan, mortgage.
Behavioral approach (snowball): Pay off smallest balance first regardless of rate. The psychological satisfaction of eliminating a loan entirely can improve follow-through for people who struggle with staying on a long repayment plan.
The Loan Payoff Calculator shows the total interest for any single loan. For comparing multiple loans, calculate the total remaining interest on each and focus your extra payments on whichever approach — avalanche or snowball — you're most likely to maintain.
When Paying Off a Loan Early Isn't the Best Move
Prepaying a low-rate loan isn't always optimal, particularly when:
- The rate is below inflation. If you have a 3% mortgage and inflation is running at 4%, the real cost of that debt is negative — your loan is getting cheaper in real terms every year.
- You have no emergency fund. Putting every spare dollar into loan prepayment while carrying no savings means any unexpected expense (medical, car, job loss) forces you into high-rate debt. Three to six months of expenses in savings typically takes priority over loan prepayment.
- You have high-rate debt elsewhere. A 5% mortgage doesn't need extra payments while you're carrying 20% credit card debt. Clear the high-rate debt first.
- Your employer offers a retirement match. A 100% employer match on 401(k) contributions up to 5% of salary is a 100% instant return — this almost always outperforms any loan prepayment savings.
The question "should I pay extra on my loan?" is really a comparison question: what's the after-tax interest rate on the loan versus what return can you earn by doing something else with that money?
