The Cost of Borrowing Money: Loan Literacy 101

Did you know?

If you borrow $50,000 at an 8 percent annual interest rate, to be paid back over 20 years, do you know how much it will cost you?

• If you make payments of $418.22 each month over a period of 20 years, you will pay $50,372.80 in total interest.
• That interest is more what you originally borrowed! It will cost you more than $100,000 to borrow $50,000.
• Do the math: $418.22 per month x 240 months = $100,372.80.

Don't believe it?

Try the loan calculator below to see how much it costs to borrow money.

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Principal (amount to be borrowed): $ (in whole dollars, no punctuation -- e.g., 1500)

Annual interest rate: (as a percentage, e.g., 7.25 percent per year)

Months to pay back: (months in whole numbers, e.g., 24)

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Written by Ted Frick February 8, 2001 (revised June 24, 2012)