## Total Loan Cost Calculator

Total Loan Cost Calculator can be used to calculate what shall be the cost of the loan after repaying the same until the end of the period.

#### Total Loan Cost Calculator

(L * R * (1+R)^{n*F} ) / ((1+R)^{n*F}-1)

- L is the loan amount
- R is the total outstanding amount.
- n is the number of periods for which loan is required to be paid
- F is the frequency for which interest is going to be paid out

### About Total Loan Cost Calculator

The formula for calculating Total Loan Cost is per below:

**(L * R * (1+R)**

^{n*F}) / ((1+R)^{n*F}-1)Wherein,

- L is the loan amount
- R is the rate of interest per annum
- n is the number of periods for which loan is required to be paid
- F is the frequency for which interest is going to be paid out

People dream of buying houses, luxury cars, etc. but however, not everyone is fortunate to have funds to buy them, and thus, they opt for a loan wherein there the cost is involved in it. The cost comes in the form of interest, which again varies from financial institutionFinancial InstitutionFinancial institutions refer to those organizations which provide business services and products related to financial or monetary transactions to their clients. Some of these are banks, NBFCs, investment companies, brokerage firms, insurance companies and trust corporations. read more to financial institution. The loan could be borrowed for the house, vehicle, education, etc. This calculator can be used to calculate the total cost of the loan, which is what shall be the amount paid in total versus what the amount was borrowed, and the difference would be interest payment.

### How to Calculate Using Total Loan Cost Calculator?

One needs to follow the below steps in order to calculate the total cost of the loan.

**Step #1 –** First of all, determine the loan amount that has to be borrowed. A financial institution generally lends more loan amounts to those who have a better credit score and lends lower amounts to those who don’t have a good credit score. Enter the loan amount as required.

**Step #2 –** Determine the rate of interestDetermine The Rate Of InterestThe Real Interest Rate formula calculates the rate of interest after excluding the impact of inflation. It helps measure inflation-adjusted return on investments on financial security or a loan or deposits. Real interest rate formula = normal rate of interest - inflation (actual or expected)
read more which shall be applicable and also the frequency and accordingly find out the rate to calculate the cost of interest. For example, if the rate of interest is 12% per annum, and if the compound frequency is monthly, then the rate of interest would be 12% / 12, which is 1%.

**Step #3 – **Multiply the loan amount by the equivalent rate of interest that was determined in step 2.

**Step #4 – **Now, we need to compound the same by the rate that was determined in step 2 until the end of the loan period.

**Step #5 – **We now need to discount the above result obtained in step 4 as given in the formula

**Step #6 – **After entering the formula, which was discussed above, we shall obtain installments periodically.

**Step #7 –** Now multiply the installments by a number of periods and frequency to determine the total cost of the loan.

### Example #1

Mr. N wants to set up a business wherein the biggest expenditure is the cost of machinery and for which he doesn’t have funds. Hence, he approaches the bank for a term loan for $150,000 and provides machinery as collateral. The bank agrees to provide term loans for a period of 15 years, and the rate of interest will be 7.55% that will be compounded on a monthly basis. However, due to the festive offer, the bank will not charge any processing fees of the loan.

Based on the given information, you are required to calculate what shall be the cost of the loan to Mr. N for purchasing machinery on the term loan.

**Solution:**

We need to calculate the Installment amount; for that first, we shall calculate the loan amount, which is $150,000. The number of periods it is required to be paid in 15 years, but since here Mr. N is going to pay on a monthly basis hence the number of payments that he shall be required to be paid is 15*12, which is 180 equally installments and lastly, the rate of interest is 7.55% fixed which shall be calculated monthly which is 7.55%/12 which is 0.63%.

Sr No | Particulars | Amount |
---|---|---|

1 | Loan Amount Approved | $150,000 |

2 | Number of Years | 15 |

3 | Rate of Interest per annum | 7.55% |

4 | Frequency of Payment | 12 |

5 | Monthly Rate | 0.63% |

6 | Total number of payments | 180 |

Now we shall use the below formula to calculate the installment amount.

**Loan Installment = (L * R * (1+R)**

^{n*F }) / (**(1+R)**

^{n*F}-1)- = (150,000 * 0.63% * (1 + 0.63%)
^{15*12}) / ( (1 + 0.63%)^{15*12}– 1 ) **= 1,394.78**

Therefore, the Installment amount for Mr. N for 15 years on the loan amount 150,000 shall be 1,394.78

The calculation of the total loan amount for Mr. N is as follows:

- = 1,394.78 * 15 * 12
**= $251,061.11**

### Example #2

Mr. Gomzi wants to pursue higher education in a renowned university wherein the total estimated costEstimated CostCost estimate is the preliminary stage for any project, operation, or program in which a reasonable calculation of all project costs is performed and thus requires precise judgement, experience, and accuracy.read more will be $35,640. However, since he lacks funds, he approaches a bank to borrow a loan. The bank charges 11% interest per annum, which shall be compounded quarterlyCompounded QuarterlyThe compounding quarterly formula depicts the total interest an investor can earn on investment or financial product if the interest is payable quarterly and reinvested in the scheme. It considers the principal amount, quarterly compounded rate of interest and the number of periods for computation.read more, and the loan period will be for 8 years. The bank has no charges system for an education loan, but however, it charges 3% pre-penalty charges.

Based on the given information, you are required to calculate the total cost of the loan, and what amount would Mr. Gomzi be paying only in the form of interest?

**Solution:**

We need to calculate the Installment amount; for that first, we shall calculate the loan amount, which is $35,640. The number of periods it is required to be paid in 8 years, but since here Mr. Gomzi is going to pay on a quarterly basis hence the number of payments that he shall be required to be paid 8*4, which is 32 equally installments and lastly, the rate of interest is 11.00% fixed which shall be calculated quarterly which is 11.00%/4 which is 2.75%.

Sr No | Particulars | Amount |
---|---|---|

1 | Loan Amount Approved | $35,640 |

2 | Number of Years | 8 |

3 | Rate of Interest per annum | 11% |

4 | Frequency of Payment | 4 |

5 | Quarterly Rate | 2.75% |

6 | Total number of Payments | 32 |

Now we shall use the below formula to calculate the installment amount.

**Loan Installment = (L * R * (1+R)**

^{n*F}) / ((1+R)^{n*F}-1)- = (35,640 *2.75% * (1 + 2.75%)
^{8*4})/ ((1 + 2.75%)^{8*4}– 1 ) **= 1,689.07**

Therefore, the Installment amount for Mr. Gomzi for 8 years on the loan amount 35,640 shall be 1,689.07

The calculation of the total loan amount for Mr. Gomzi is as follows:

- = 1,689.07 * 8 * 4
**= $54,050.3**

Total interest outgo equals to $54,050.35 – $35,640 which is **$18,410.35**

### Conclusion

This is a superset calculator for all kinds of loans wherein a fixed rate of interest is applied, and that includes Home loan, Student Loan, Car loan, education loan, etc. This calculator will calculate the installment amount as well the total loan cost by multiplying the installment amount with a number of years and frequency for which that shall be paid.

### Recommended Articles

This has been a guide to Total Loan Cost Calculator. Here we provide you the calculator that is used to calculate the total loan amount until the end of the period with some examples. You may also take a look at the following useful articles –