CostHonest
Free instant estimates · Ontario market ranges

How much interest will you pay over the life of your loan?

Lenders quote a monthly payment; this shows the lifetime cost. Enter the amount, APR and term to get the required payment and the cumulative interest, then add an extra monthly amount and watch the term shrink and the interest fall. The default $25,000 at 7% over five years needs $495 a month and racks up $4,702 of interest — 18.8% on top of what you borrowed — and even a modest extra payment claws a real piece of that back.

Common questions

Why is the total interest so much more than the rate suggests?

The 7% is charged every year on whatever balance remains, and the balance takes five years to clear. Cumulative interest of $4,702 on $25,000 works out to 18.8% of the principal — roughly the annual rate multiplied by the average time the money is owed.

How do extra payments save interest?

Every extra dollar goes straight at the principal, and interest is only ever charged on principal still owed. The required payment stays the same, so the loan simply ends sooner — the calculator shows exactly how many months you cut and how many dollars stay with you instead of the lender.

Does this work for credit cards?

Only roughly. Cards recalculate minimum payments as the balance moves, and most people keep spending on them, so real card interest usually runs worse than this projection. For fixed personal loans, car loans and student loans, the arithmetic here is exact.

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