Method Deck / finance

Total interest over a loan

Computes the total interest paid over the full life of a fixed-payment amortizing loan.

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Inputs

principal (number, currency units, required) min 0 : Original loan amount
annual_rate_percent (number, %, required) min 0 : Nominal annual interest rate, compounded monthly
months (integer, required) min 1 : Number of monthly payments (loan term in months)

Outputs

monthly_payment (currency units): Fixed monthly payment
total_paid (currency units): Sum of all payments over the loan
total_interest (currency units): Total interest paid over the loan

Steps

Convert the annual rate to a decimal: r = annual_rate_percent / 100; monthly rate i = r / 12.
Compute the fixed monthly payment using the standard annuity formula: payment = principal * i * (1+i)^months / ((1+i)^months - 1) (or principal/months if i = 0).
total_paid = payment * months.
total_interest = total_paid - principal.
Round monthly_payment, total_paid, and total_interest to 2 decimals (money to cents).

Constants

None.

Sources

Principles of Corporate Finance (McGraw-Hill, 2026-09-30T19:31:29Z) - Total interest equals the sum of all fixed payments minus the original principal

Worked example and test vectors

Name	Inputs	Answer
worked example	`{"principal":200000,"annual_rate_percent":6,"months":360}`	$231,676.00
test vector: zero interest	`{"principal":12000,"annual_rate_percent":0,"months":12}`	$0.00

Published card

Address: 73ee86d1f3d837daba5eded55dc45636
Made at: 2026-09-30T22:39:30.722Z
Method sha256: cd9918e6055497712e3d4787d3d4a137709b07303e5d44a5793f0398b843f94c

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