What Is the Total Loan Cost Calculator?
When you borrow money, the sticker price isn't the whole story. The total loan cost is what you actually pay over the life of the loan: the amount you borrowed (the principal), every dollar of interest, and any upfront fees such as origination or processing charges. This calculator combines all three so you can compare offers on an apples-to-apples basis instead of being fooled by a low headline rate.
How to Use It
Enter the loan amount, the annual interest rate, the term in years, and any one-time fees. The calculator works out your fixed monthly payment, the total of all payments, the lifetime interest, and the grand total cost including fees. Adjust the inputs to instantly see how a shorter term or a lower rate changes the bottom line.
The Formula Explained
First we find the monthly payment using the standard amortization formula \( \text{PMT} = P \cdot r / (1 - (1 + r)^{-n}) \), where \(P\) is the principal, \(r\) is the monthly interest rate (annual rate \(\div 12 \div 100\)), and \(n\) is the number of monthly payments (years \(\times 12\)). The total of payments is \( \text{PMT} \times n \). Total interest is that figure minus the principal, and total cost adds the upfront fees on top.
$$\begin{gathered} \text{Total Cost} = M \cdot n + \text{Upfront Fees} \\[1.5em] \text{where}\quad \left\{ \begin{aligned} M &= \text{Loan Amount} \cdot \dfrac{r}{1-(1+r)^{-n}} \\ r &= \dfrac{\text{Rate (\%)}}{1200} \\ n &= 12 \times \text{Term (years)} \end{aligned} \right. \end{gathered}$$
Worked Example
Borrow $20,000 at 6% annual interest over 5 years (60 months) with $500 in fees. The monthly rate is 0.5%, giving a payment of about $386.66. Over 60 months that's roughly $23,199.36 in payments — $3,199.36 of interest. Add the $500 fee and the total loan cost is about $23,699.36.
$$M = 20000 \cdot \dfrac{0.005}{1-(1+0.005)^{-60}} \approx 386.66$$$$\text{Total Cost} = 386.66 \times 60 + 500 \approx 23199.36 + 500 = 23699.36$$
FAQ
Does this include all fees? It includes the upfront fees you enter. Recurring costs like insurance or late fees are not modeled.
What rate should I enter? Use the nominal annual interest rate (APR before fees). The calculator converts it to a monthly rate internally.
What if the interest rate is 0%? The calculator simply divides the principal evenly across all payments, so total interest is zero and total cost equals principal plus fees.
