1. What is the Amount of Interest Paid Calculation?

The Amount of Interest Paid calculation determines the total interest paid over the entire loan tenure. It helps borrowers understand the true cost of borrowing beyond just the principal amount.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( EMI \) — Equated Monthly Installment (monthly payment)
• \( N \) — Number of monthly payments
• \( P \) — Principal loan amount
• \( I \) — Total interest paid over loan tenure

Explanation: This formula calculates the difference between the total amount paid (EMI × N) and the original principal, which represents the interest cost.

3. Importance of Interest Calculation

Details: Understanding total interest paid helps borrowers make informed financial decisions, compare loan options, and plan their finances effectively.

4. Using the Calculator

Tips: Enter the monthly EMI amount, total number of payments, and principal amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate total interest paid?
A: It helps borrowers understand the true cost of credit and make better financial decisions when comparing loan options.

Q2: Does this calculation include all loan costs?
A: This calculation only includes the interest component. Other fees and charges may apply separately.

Q3: How can I reduce total interest paid?
A: Making larger down payments, choosing shorter tenures, or making prepayments can reduce total interest costs.

Q4: Is this calculation accurate for all loan types?
A: This formula works for fixed-rate loans with constant EMI payments. Variable rate loans may require different calculations.

Q5: What currency should I use?
A: Use any consistent currency unit for all inputs (EMI, Principal). The result will be in the same currency.