Most of us have to borrow money to make major purchases (like homes or cars). Though you probably can't avoid paying interest on loans, it's possible to minimize the interest paid by maintaining a good credit score, shopping around for the lowest rates, and paying off your loan as quickly as possible.
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How Much You'll Pay in Loan Interest
If you borrow $20,000 at 5.00% for 5 years, your monthly payment will be $377.42 and you will pay a total of $2,645.48 over the term of the loan.
Note: In most cases, your monthly loan payments do not change over time. The loan "amortizes" over the repayment period, meaning that the proportion of "interest paid vs. principal repaid" changes each month. As the loan continues to amortize, the amount of monthly interest paid will decrease (while the amount of principal paid increases).
To see how much interest you should expect to pay on a fixed-rate loan, use our loan interest calculator.
How to Use Our Loan Interest Calculator
Say that you're going to borrow $20,000 at 5%. You expect to repay it over 5 years. Enter "$20,000" as the Loan Amount, "5" as the Term, and "5" as the Annual Interest Rate.
Use this loan interest calculator to see how much interest you can expect to pay your lender over the course of your loan.