The Cost of Credit


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

All calculations assume constant monthly payments over the life of the loan, monthly calculation of interest on the remaining unpaid principal, and no prepayment.

This information is provided for illustrative purposes only. The actual amount of interest you’ll pay on a loan will depend on several factors, including the amount you borrow, the interest rate, the repayment term, and loan conditions.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015


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