How much interest a loan really costs
The monthly payment is only half the story. Here's how to read the total interest figure and what changes it most.
4 min readReviewed May 1, 2026
Quick answer
Total interest = (monthly payment × number of payments) − amount borrowed. Term length and rate move it more than anything else you control.
What moves total interest the most
- Term length — doubling the term often more than doubles total interest.
- Interest rate — every 1% extra over a 30-year mortgage is tens of thousands.
- Extra principal payments — each one shrinks every future interest charge.
- Loan size — interest scales linearly with the amount borrowed.
A concrete comparison
Borrow $20,000 at 8% APR. Over 3 years you pay about $2,562 in interest. Over 7 years, about $6,196 — more than twice the cost for a smaller monthly payment.
When two offers have the same monthly payment, the one with the shorter term is almost always cheaper overall.