Quick reference
How total interest is calculated
For any fully amortising loan — mortgage, car loan, personal loan — the total interest paid is simply the total of all payments minus the original principal. If you borrow 150.000 and make 300 monthly payments of 750, your total payments are 225.000. Total interest: 225.000 - 150.000 = 75.000.
This works because every payment on an amortising loan covers both interest and principal. The sum of all payments equals principal plus all interest charges over the full term. No additional calculation is needed beyond multiplying the monthly payment by the number of payments and subtracting the original loan amount.
For simple interest loans — common for short-term personal loans and some car finance — the calculation is even more direct. Simple interest = Principal x Rate x Time. A 10.000 loan at 8% simple interest over 3 years: 10.000 x 8% x 3 = 2.400 total interest.
The difference between simple and compound interest matters for longer loans. Simple interest charges interest only on the original principal. Compound interest charges interest on the outstanding balance — which includes previously accrued interest. All standard mortgages and most consumer loans use compound interest (charged monthly). The compounding means total interest on a 25-year mortgage is substantially higher than a simple interest calculation would suggest.
Total interest formula for amortising loans
Worked examples
Monthly rate: 3,8% / 12 = 0,3167%. Monthly payment: 250.000 x (0,003167 x 1,003167^300) / (1,003167^300 - 1) = 1.294. Total payments: 1.294 x 300 = 388.200. Total interest: 388.200 - 250.000 = 138.200. The total interest of 138.200 is 55% of the original principal — borrowing 250.000 actually costs 388.200 over 25 years.
At 3,5%: monthly payment 1.001, total payments 300.300, total interest 100.300. At 4,5%: monthly payment 1.111, total payments 333.300, total interest 133.300. Difference: 33.000. A 1 percentage point difference in rate on a 200.000 mortgage over 25 years costs approximately 30.000 to 35.000 in additional interest. This illustrates why negotiating the rate matters far more than minor arrangement fee differences.
20 years: monthly payment 1.091, total payments 261.840, interest 81.840. 30 years: monthly payment 860, total payments 309.600, interest 129.600. The 30-year term saves 231 per month but costs an extra 47.760 in total interest. The longer term is not inherently wrong — the monthly saving invested could exceed the interest cost — but the comparison must be made explicitly.
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Total interest by loan amount and rate — 25-year term
| Loan Amount | 3% APR | 4% APR | 5% APR | 6% APR |
|---|---|---|---|---|
| 100.000 | 39.700 | 58.100 | 75.400 | 93.000 |
| 150.000 | 59.600 | 87.100 | 113.100 | 139.500 |
| 200.000 | 79.400 | 116.200 | 150.800 | 186.100 |
| 250.000 | 99.300 | 145.200 | 188.500 | 232.600 |
| 300.000 | 119.100 | 174.300 | 226.200 | 279.100 |
Common mistakes when thinking about total interest
Methodology
Total interest calculated as monthly payment multiplied by number of payments minus original principal. Monthly payment uses standard amortization formula with monthly compounding. All calculations assume fixed rate for the full term and no overpayments.
For variable-rate loans, total interest cannot be calculated precisely as future rates are unknown. An estimate can be made using the current rate held constant, but actual total interest will differ as the rate changes.
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Frequently asked questions
Formula based on standard mathematical and financial methods. Results are for informational purposes. Last reviewed May 2026. Version 1.