The total interest - calculated equation will calculate the amount of cumulative interest paid over the life of the loan. 

Inputs

The inputs for the equation are:

• P - principal, the original amount financed
• i - Interest rate entered as a percentage; i.e., enter 4.6 for a 4.6% interest rate
• n - term of the loan in years

Description

An Amortization table will show, for each payment period of a loan, the payment amount that is applied to principal and  the amount paid as interest.

For a standard fixed rate mortgage, the fixed monthly payment in the beginning has a greater percentage of interest paid than to the principal in the same payment.  As the loan matures, the amount of principal paid each month  increases, and the amount paid as interest decreases.