Financial Functions
Advanced

The total interest over a whole loan

From the first payment to the last: the full cost of borrowing.

Task:

Compare two offers for the same 15,000 loan at 6% a year: one over 3 years, one over 6. In B6 and C6 give the total interest each would cost, as positive figures.

Hints

+5 XPno-hints bonus

Solve it on your own to keep the bonus. Each hint gets one step closer to the formula.

Variations of CUMIPMT, CUMPRINC

0/3

The same formula in the other shapes it takes at work.

  1. CUMIPMT Function

    Calculate cumulative interest paid over a range of periods.

    Core
    Advanced
  2. CUMIPMT for one year in the middle of a loan

    Interest paid in year 2 is periods 13 to 24.

    Advanced
  3. The total interest over a whole loan

    From the first payment to the last: the full cost of borrowing.

    Advanced

The data in this exercise

This is the grid you start with. Cell references in the task — B6, C2 — point at the row numbers and column letters below.

6 rows × 3 columns2 cells you fill in
ABC
13-year6-year
2Annual rate0.060.06
3Years36
4Loan1500015000
5
6Total interest
What this exercise teachesMay contain the answer

The longer loan has the smaller monthly payment and roughly double the total interest. Reading the full cost of credit alongside the payment is what stops a lower monthly figure looking like the cheaper deal.