Tinker Tools

Loan Interest Calculator Instantly

Calculate simple and compound interest on any loan or investment. Compare compounding frequencies and see year-by-year growth.

ResultsCompound (monthly)
Total Amount$12,833.59
Total Interest$2,833.59
Effective Annual Rate5.1162%

Principal vs Interest Growth

Principal 77.9%
Interest 22.1%
Year-by-Year Balance
YearInterest EarnedBalance
1$511.62$10,511.62
2$537.79$11,049.41
3$565.31$11,614.72
4$594.23$12,208.95
5$624.63$12,833.59

Formula Used

A = P(1 + r/n)^(nt)

P = Principal, r = Annual rate, n = Compounding frequency, t = Time in years

How it works

1. Choose Interest Type

Select simple or compound interest. For compound interest, choose how often interest is compounded: annually, monthly, or daily.

Simple vs Compound

2. Enter Details

Input the principal amount, annual interest rate, and term. You can specify the term in years or months for flexibility.

Real-time

3. Track Growth

View total amount, total interest, and effective annual rate. The year-by-year table shows how your balance grows over time.

Year-by-Year

What is a Loan Interest Calculator?

A loan interest calculator shows you exactly how much a loan will cost over its lifetime — not just the monthly payment, but the total interest you will pay from the first installment to the last. Most people focus on whether they can afford the monthly bill. That is the wrong question. The right question is how much extra money you are handing to the lender beyond the amount you borrowed. A 50-million-won personal loan at 8 percent over 5 years costs roughly 10.8 million won in interest alone. You borrow 50 million, you repay nearly 61 million. The calculator makes that gap impossible to ignore, and that visibility is the first step toward smarter borrowing decisions.

Interest on loans works in two fundamental ways — simple and compound. Simple interest charges you only on the original principal. If you borrow 10 million won at 5 percent simple interest for one year, you owe 500,000 won in interest regardless of when payments are made. Compound interest, on the other hand, charges interest on both the principal and any accumulated unpaid interest. Most consumer loans — auto loans, personal loans, student loans — use compound interest calculated on a monthly or daily basis. The difference between simple and compound interest grows dramatically over longer loan terms. On a 10-year loan, compounding can add thousands or even millions of won to the total cost compared to simple interest at the same stated rate.

Two terms cause persistent confusion among borrowers: APR and APY. The Annual Percentage Rate — APR — is the stated yearly interest rate without accounting for the effect of compounding within the year. The Annual Percentage Yield — APY — includes compounding and reflects the true annual cost. A loan with a 12 percent APR compounded monthly has an effective APY of approximately 12.68 percent. Korean financial regulations require lenders to disclose the 총부담비용 (total cost of borrowing) so consumers can compare products on an equal footing. The calculator displays both APR and effective annual rate so you can see the real cost, not just the headline number.

Key Features and Benefits

  • Simple vs Compound Interest Toggle — Switch between simple and compound interest calculations to see how compounding frequency affects your total cost. Monthly compounding is standard for most consumer loans, but some products compound daily or quarterly. The difference matters — daily compounding on a long-term loan adds measurably more interest than monthly compounding at the same nominal rate. Seeing both side by side helps you understand what your loan contract actually means in dollar terms.
  • Complete Amortization Table — View a payment-by-payment breakdown showing the principal portion, interest portion, and remaining balance for every installment. Early payments are interest-heavy — on a 5-year loan at 8 percent, roughly 60 percent of your first payment goes to interest. By the final year, that ratio reverses to about 95 percent principal. The table makes this invisible cost structure visible.
  • Multi-Loan Comparison — Enter up to three loan scenarios side by side — different rates, terms, or principal amounts — and compare monthly payments, total interest, and total cost in a single view. This is especially useful when you are weighing offers from different lenders or deciding between a shorter term with higher payments and a longer term with lower payments but more total interest.
  • Early Repayment Modeling — Input a lump-sum prepayment or recurring extra payment and see how it changes your payoff date and total interest cost. Paying an extra 100,000 won per month on a 30-million-won, 5-year loan at 7 percent saves approximately 1.2 million won in interest and shaves about 8 months off the loan. The calculator shows you exactly how much time and money each extra payment buys.
  • APR to APY Conversion — Enter the stated APR and the compounding frequency, and the calculator instantly shows you the effective APY. This conversion is essential for comparing loans with different compounding schedules on an apples-to-apples basis. A loan advertising 6 percent APR with daily compounding costs more than one advertising 6.1 percent APR with annual compounding.
  • Loan Type Templates — Select from pre-configured templates for common loan types — personal loan, auto loan, student loan, or 전세자금대출 (jeonse deposit loan). Each template pre-fills typical rate ranges, term lengths, and compounding schedules for Korean financial products, giving you a realistic starting point for your calculation.

How to Calculate Your Loan Interest

  1. 1

    Identify the Loan Principal

    The principal is the amount you actually borrow — not the purchase price of whatever you are financing. If you are buying a 40-million-won car with a 10-million-won down payment, your loan principal is 30 million won. If you are taking out a personal loan for debt consolidation, the principal is the total amount you receive from the lender. Be precise here. Lenders sometimes deduct origination fees from the disbursed amount, which means you receive less than the stated principal but pay interest on the full amount. Check whether your loan has origination fees and adjust the effective principal accordingly.

  2. 2

    Enter the Interest Rate and Compounding Frequency

    Input the annual interest rate as stated in your loan agreement. Then select the compounding frequency — monthly is the most common for Korean consumer loans, but daily compounding appears in some credit products. The calculator converts the annual rate to the period rate automatically. For a 12 percent annual rate compounded monthly, the period rate is 1 percent per month. For daily compounding, it is approximately 0.0329 percent per day. The compounding frequency determines how often interest is calculated and added to your outstanding balance, which in turn affects the total cost.

  3. 3

    Set the Loan Term

    Enter the loan duration in months or years. Personal loans in Korea typically range from 12 to 60 months. Auto loans commonly run 36 to 72 months. 전세자금대출 terms align with the jeonse contract period — usually 24 months with renewal options. Student loans through the Korea Student Aid Foundation (한국장학재단) offer repayment terms up to 20 years for income-contingent plans. Longer terms reduce your monthly payment but increase total interest. A 30-million-won loan at 6 percent costs 3.5 million won in interest over 3 years but 9.7 million won over 7 years. That extra monthly breathing room costs you 6.2 million won.

  4. 4

    Choose Your Repayment Method

    Korean loans typically offer three repayment structures. 원리금균등상환 (equal principal and interest) keeps your total monthly payment constant — the mix of principal and interest shifts over time, but the amount you pay each month stays the same. 원금균등상환 (equal principal) keeps the principal portion constant while the interest portion decreases — your monthly payment starts higher and gradually drops. 만기일시상환 (bullet repayment) means you pay only interest each month and repay the entire principal at the end of the term. Each structure produces a different total interest cost. Equal principal repayment costs the least in total interest because you reduce the outstanding balance faster.

  5. 5

    Review Total Interest Cost

    The calculator displays three key outputs: your monthly payment amount, the total interest paid over the life of the loan, and the total amount repaid (principal plus interest). Focus on the total interest figure. That number represents the true price of borrowing. Compare it across different scenarios — a lower rate, a shorter term, a different repayment method — to find the combination that minimizes cost while fitting your monthly budget. Even small rate reductions produce significant savings over multi-year terms.

  6. 6

    Model Early Repayment

    If you anticipate having extra cash at some point — a year-end bonus, a tax refund, inheritance — enter it as a lump-sum prepayment and see how it changes the schedule. Korean loan contracts often include a 중도상환수수료 (early repayment penalty), typically 1 to 2 percent of the prepaid amount, applicable during the first one to three years of the loan. After the penalty window closes, prepayment is free. The calculator can factor in this penalty so you can determine whether prepaying is still a net positive after accounting for the fee.

Expert Tips for Managing Loan Costs

The single most effective way to reduce loan costs is to shorten the term. This sounds obvious, but most borrowers default to the longest available term because it produces the smallest monthly payment. Consider a 20-million-won loan at 7 percent. Over 3 years, you pay 2.2 million won in interest. Over 5 years, that jumps to 3.8 million won. Over 7 years, it reaches 5.4 million won. You save 3.2 million won by choosing a 3-year term instead of 7 years — but your monthly payment increases by about 180,000 won. The question is not which option is better in the abstract. The question is whether you can afford that higher payment without compromising your financial stability. If you can, the shorter term is almost always the right choice.

Debt consolidation can be a powerful tool or a dangerous trap, depending on execution. If you have multiple high-interest loans — a credit card balance at 18 percent, a personal loan at 12 percent, and a small installment plan at 9 percent — rolling them into a single loan at 7 percent reduces your blended rate and simplifies your payments. The calculator lets you model this by comparing the total interest on your current loans against the total interest on a single consolidated loan. But consolidation only works if you stop accumulating new high-interest debt. Too many borrowers consolidate, feel relief from the lower monthly payment, and then start running up their credit cards again — ending up with more total debt than before. Use the calculator as a reality check, not a permission slip.

Variable-rate loans deserve special scrutiny. A variable rate that starts at 4 percent looks much more attractive than a fixed rate at 5.5 percent — until rates rise and your 4 percent becomes 7 percent. Korean variable-rate loans typically adjust based on the COFIX or 금융채 benchmark, with adjustments every 3, 6, or 12 months. The calculator lets you model rate increases to see how much your payment would change. A useful stress test is to add 2 percentage points to the current variable rate and check whether you could still afford the payment. If a 2-point increase would put you in financial distress, the fixed rate — with its built-in certainty premium — may be the safer choice.

Opportunity cost is the hidden dimension in every loan decision. Money you spend on loan payments is money you cannot invest, save, or spend elsewhere. A 50-million-won loan at 5 percent costs you 2.5 million won in interest annually. But if you could invest that same 50 million won at 8 percent in a diversified portfolio, the annual return would be 4 million won — a net gain of 1.5 million won. This does not mean you should always invest instead of repaying debt. Investment returns are uncertain and variable, while loan interest is guaranteed and fixed. But it does mean the decision to prepay a low-interest loan aggressively should consider what else that money could do. High-interest debt — anything above 7 to 8 percent — should almost always be repaid as fast as possible. Low-interest debt — below 4 percent — may be worth carrying if you have disciplined investment habits.

Related Tools

Mortgage Calculator

Apply loan interest concepts specifically to home loans with amortization schedules and LTV calculations

Credit Card Interest Calculator

Analyze the high-interest cost of revolving credit card balances and compare them to installment loan rates

Currency Converter

Convert loan amounts and interest costs when comparing cross-border lending options or studying abroad

Loan interest is the invisible cost that separates what you borrow from what you repay. The Loan Interest Calculator makes that cost visible — but understanding the full picture means looking at related financial obligations too. The Mortgage Calculator applies these same interest principles to the largest loan most people carry, with specialized features for home-buying scenarios. The Credit Card Interest Calculator reveals how revolving debt at 15 to 24 percent APR can silently undermine your finances even while you diligently pay down a 5 percent installment loan. And the Currency Converter helps you compare borrowing costs across borders if you are considering international education loans or overseas property financing. Together, these tools give you a complete map of your borrowing costs.

Frequently Asked Questions

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