1. What is the Total Interest Formula?

The total interest formula calculates the total amount of interest paid over the entire mortgage tenure. It provides a clear picture of the additional cost beyond the principal amount borrowed.

2. How Does the Calculator Work?

The calculator uses the total interest formula:

Where:

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

Explanation: The formula calculates the total amount paid over the loan term and subtracts the principal to determine the interest portion.

3. Importance of Total Interest Calculation

Details: Understanding total interest helps borrowers compare loan options, make informed financial decisions, and plan for long-term financial commitments.

4. Using the Calculator

Tips: Enter EMI in currency, number of payments in months, and principal in currency. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate total interest separately?
A: It helps borrowers understand the true cost of borrowing and compare different loan offers effectively.

Q2: Does this formula work for all types of loans?
A: This formula works best for fixed-rate mortgages and loans with consistent monthly payments.

Q3: How can I reduce total interest paid?
A: Making extra payments, choosing a shorter loan term, or securing a lower interest rate can reduce total interest.

Q4: Is this calculation affected by interest rate changes?
A: This calculation assumes a fixed interest rate throughout the loan term. Variable rates would require different calculations.

Q5: Can I use this for other types of installment loans?
A: Yes, this formula can be applied to any installment loan with fixed monthly payments, such as auto loans or personal loans.