How the cost of a loan is worked out
US lenders charge the yearly note rate monthly, at one twelfth of the rate. The calculator sets the equal monthly payment that pays the loan off over the term. Total interest is all the payments added up, minus the loan amount.
An origination fee taken out of the loan doesn't change the payment, but you receive less. Regulation Z counts the fee in the finance charge (§1026.4), and the APR is the rate at which your payments are worth exactly the money you receive (Appendix J).
Worked example
A $15,000 loan at 11% for 4 years costs $387.68 a month. The total of payments is $18,608.78, so the interest is $3,608.78, and $1,493.92 of it is paid in the first year. Interest builds up at about $4.52 a day at the start.
With a 5% origination fee, you receive $14,250 but still repay the same. The finance charge rises to $4,358.78 and the APR to 13.76%.
Interest, finance charge and APR
Interest is what the lender charges for the money you owe. The finance charge is the dollar cost of the credit, interest plus fees such as an origination fee. The APR shows that cost as a yearly rate, so it's the best single number for comparing offers.
Daily interest matters when you pay off early: your payoff amount includes interest up to the day the lender gets your money.
To estimate the payoff amount on a loan you already have, use the US loan prepayment penalty calculator .
What this calculator assumes
The rate is fixed and you make equal monthly payments for the whole term. The fee is deducted from the loan proceeds. Daily interest uses a 365-day year; some lenders use 360. Lenders charging interest daily can differ by a few cents.
Borrowing in the UK?
The country choices above the inputs open separate local pages. UK lenders quote an APR that already includes fees, as an effective annual rate. Choosing United Kingdom opens that page and resets the inputs; amounts are not converted.
For a loan from a UK lender, use the UK loan interest calculator in pounds.
Inputs for the US loan cost calculator
Amount to borrow
The loan amount in US dollars, before any origination fee is deducted.
Interest rate
The yearly note rate from your loan offer. The rate shown is only an example.
Term
How many years you'll repay over. Part-years are fine if they come to whole months, such as 2.5 years for 30 payments.
Origination fee
The lender's fee as a percentage of the loan amount, deducted from the money you receive. Enter 0 if there is no fee.
CALCULATOR QUESTIONS
US loan cost calculator questions
How do I calculate the total cost of a loan?
Multiply the monthly payment by the number of payments to get the total of payments, then take off the money you actually received. That's the finance charge: interest plus fees.
What is the finance charge?
It's the dollar cost of the credit under the Truth in Lending Act, including interest and most loan fees such as an origination fee.
Why is my APR higher than my interest rate?
Because the APR counts fees as well. With an origination fee you receive less money but repay the same, which makes the yearly cost higher than the note rate.
How is daily interest on a loan calculated?
Multiply the balance by the yearly rate and divide by 365 (some lenders use 360). On $15,000 at 11% that's about $4.52 a day.