Interest Rates Really Matter

Why Do Interest Rates Really Matter?

Lower Interest Rates Help You Save Money.
It's very shocking to see how much money you can save by finding a lower interest rate and by paying your loan off over a shorter period of time. For example, if you have a $100,000 30 year mortgage at 10%, you will pay over $215,000 in interest over the life of the loan. However, if you have the same loan at 6% you will pay only about half of that in interest. Furthermore, if you can reduce the 30 years of payments to 15 years, you can cut your interest payments in half again!

How to Read the Table.
The table below shows the amount of interest on a $100,000 loan at various interest rates and different time periods. The table is most useful if you compare the differences between high and low interest rates, between short and long loans, and the different variations between both of those variables. You'll find that by lowering your interest rate and paying off your loan faster, you will save more money than you expect!

Total Interest Paid over the life of the loan on a $100,000 fixed rate mortgage at various interest rates and different loan lengths

Years to Pay 4% 5% 6% 7% 8%
30 Years $71,870 $93,256 $115,838 $139,509 $164,155
25 Years $58,351 $75,377 $93,290 $112,034 $131,545
20 Years $45,435 $58,389 $71,943 $86,072 $100,746
15 Years $33,144 $42,343 $51,894 $61,789 $72,017
10 Years $21,494 $27,279 $33,225 $39,330 $45,593
7 Years $14,818 $18,725 $22,712 $26,779 $30,924
5 Years $10,499 $13,227 $15,997 $18,807 $21,658
3 Years $6,286 $7,895 $9,519 $11,158 $12,811

 

 

Total Interest Paid over the life of the loan on a $100,000 fixed rate mortgage at various interest rates and different loan lengths - Continued

Years to Pay 9% 10% 11% 12%
30 Years $189,664 $215,926 $242,836 $270,301
25 Years $151,759 $172,610 $194,034 $215,967
20 Years $115,934 $131,605 $147,725 $164,261
15 Years $82,568 $93,429 $104,587 $116,030
10 Years $52,011 $58,581 $65,300 $72,165
7 Years $35,148 $39,450 $43,828 $48,283
5 Years $24,550 $27,482 $30,455 $33,467
3 Years $14,479 $16,162 $17,859 $19,572

Now why don't you take a look at how you can make a million! Or go to Free Finance Tips.

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