Definition
Total interest is the sum of all interest payments made over the entire life of a loan. It represents the true cost of borrowing — the difference between the total amount you repay and the original loan principal. A longer loan term or higher interest rate increases total interest significantly.
Example
A $25,000 auto loan at 6% APR over 60 months has monthly payments of $483. Over 60 months you pay $28,980 in total. Subtract the $25,000 principal and total interest = $3,980. The same loan over 72 months totals $29,738 — $4,738 in interest, nearly $800 more.
How It's Calculated
Total Interest = (Monthly Payment × Number of Payments) − Loan Principal. For the 60-month example: ($483 × 60) − $25,000 = $3,980.
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