How much will my loan cost in total interest?

2 min read

Payments minus principalThe total interest

Rate and term drive itThe two big levers

Shorter term = lessLess time accruing

Overpay to cut itOn reducing-balance

The simple calculation

On a standard repayment loan, the total interest is straightforward: add up every payment you will make over the term, then subtract the amount you borrowed. What's left is the total interest — the true cost of the borrowing, before any separate fees. Your amortisation schedule shows it, and the repayment calculator works it out for any amount, rate and term.

What drives it

Three things move the total interest. The rate — a higher rate means more interest on the same balance. The term — a longer term means interest accrues for longer, raising the total even at the same rate. And how fast you repay — overpaying on a reducing-balance loan cuts the balance sooner and reduces total interest. Between them, the rate and term set the baseline; your repayment behaviour adjusts it. See choosing a term.

Keeping it down

To minimise total interest: take the shortest term your cash flow can sustain, get the lowest rate your accounts support, and overpay when you can on a reducing-balance product. Add any fees separately for the full cost — total interest is not the same as the fully-loaded total repayable, which includes fees too. For a flat-rate loan the total interest is fixed at outset regardless of repayment speed. See cutting the cost.

Work out your total interest on the repayment calculator, and for a firm figure, apply.

Frequently asked questions

How do I calculate the total interest on my loan?

Add up every scheduled payment over the term and subtract the amount you borrowed — the difference is the total interest, before any separate fees. A repayment calculator does this automatically for any amount, rate and term, and your amortisation schedule shows it broken down. For the full cost of borrowing, add any fees to the total interest to get the fully-loaded total repayable.

Does overpaying reduce my total interest?

On a reducing-balance loan, yes — overpaying cuts the outstanding balance sooner, so less interest accrues on it over the remaining term, reducing the total interest. The earlier you overpay, the bigger the saving. On a flat-rate or factor-rate product the total interest is fixed at outset, so overpaying may not reduce it. Check your product type and any early-repayment charge before relying on the saving.