The Cost of Credit

August 13, 2015  | By Kevin Smith

Sometimes you need to borrow money, especially to pay for a large purchase such as a home or a car. It’s easy to focus on your monthly loan payment, but to appreciate how much borrowing money might really cost, you also need to consider the amount of interest you’ll pay over time. The following tables illustrate the total interest paid over the life of three common types of loans that have a fixed annual interest rate and a fixed repayment term: mortgage loans, auto loans, and personal loans.

Mortgage loans

A home is often the biggest purchase you’ll ever make. Loan repayment terms vary; this chart illustrates the total interest paid over a 30-year repayment term.

Loan amount 3% 4% 5% 6%
$250,000 $129,444 $179,674 $233,139 $289,595
$350,000 $181,221 $251,543 $326,395 $405,434
$450,000 $232,999 $323,413 $419,651 $521,272
$550,000 $284,776 $395,282 $512,907 $637,110
$650,000 $336,553 $467,152 $606,163 $752,948
$750,000 $388,331 $539,021 $699,418 $868,786

Auto loans

You may take out a loan to buy a new or used vehicle. Loan repayment terms vary; this chart illustrates the total interest paid over a 60-month repayment term.

Loan amount 2% 4% 6% 8%
$15,000 $775 $1,575 $2,400 $3,249
$20,000 $1,033 $2,100 $3,199 $4,332
$25,000 $1,292 $2,625 $3,999 $5,415
$30,000 $1,550 $3,150 $4,799 $6,498
$35,000 $1,808 $3,675 $5,599 $7,580

Personal loans

A personal loan is unsecured, meaning that no collateral is required, so the interest rate on this type of loan is typically higher than for a secured loan. Loan repayment terms vary; this chart illustrates the total interest paid over a 36-month repayment term.

Loan amount 6% 8% 10% 12%
$8,000 $762 $1,025 $1,293 $1,566
$10,000 $952 $1,281 $1,616 $1,957
$12,000 $1,142 $1,537 $1,939 $2,349
$14,000 $1,333 $1,794 $2,263 $2,740
$16,000 $1,523 $2,050 $2,586 $3,131


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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015.
Posted in: Loans
Kevin X. Smith, CFA
  |  [email protected]

Kevin is responsible for advising clients for whom he is the lead financial advisor. He also manages the operations and development of the firm, and oversees all of the investments of Austin Wealth Management clients. Kevin is on a mission…Read More

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