1. What is Total Interest?

Total Interest represents the total amount of money paid in interest over the life of a loan. It's the difference between the total payments made and the original principal amount borrowed.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( \text{Total Payments} \) — Sum of all payments made on the loan
• \( \text{Principal} \) — Original loan amount

Explanation: This calculation shows the true cost of borrowing money beyond the principal amount.

3. Importance of Calculating Total Interest

Details: Understanding total interest helps borrowers compare loan options, make informed financial decisions, and see the long-term cost of credit.

4. Using the Calculator

Tips: Enter the total of all payments you'll make over the loan term and the original principal amount. Both values must be positive numbers, with total payments greater than principal.

5. Frequently Asked Questions (FAQ)

Q1: Why is my total interest higher than my principal?
A: This is common with long-term loans (like mortgages) where interest accumulates over many years, often exceeding the original loan amount.

Q2: How can I reduce total interest paid?
A: Make larger payments, pay more frequently, or choose shorter loan terms to reduce total interest costs.

Q3: Does this include all loan fees?
A: Only if those fees are included in your total payments amount. Some loans have separate upfront fees.

Q4: Is this calculation the same for all loan types?
A: The basic formula works for all loans, but different loan types (simple vs. compound interest) will affect how the total payments are calculated.

Q5: Can I use this for investment returns?
A: Yes, the same formula can show your total earnings (interest) by treating principal as initial investment and total payments as final value.