**HOW TO CALCULATE CUMULATIVE LOAN INTEREST**

Just as you can solve many things in Excel, there are ways you can calculate cumulative loan interests. In this post, we’ll consider how to calculate cumulative loan interest using a formula approach in Excel.

The general formula to calculate cumulative loan interest:

**=CUMIPMT(Annual interest rate/12, total periods per month, loan amount, start period, end period, payment timing)**

**Explanation**

The formula to calculate cumulative loan interest is based on the “CUMIPMT” function.

In figure 1 above, the cumulative principal paid over the loan’s total term is calculated using the START period and the END period.

**Example**

The formula in cell G12 is:

**=CUMIPMT (G6/12, G8, G5, 1, 48, 0)**

We want to calculate cumulative loan interest over a period of 4-year loan of $2,500 with 2.40% interest rate. To perform this, the **CUMIPMT** is set up thus:

**nper** – the total number of payment periods for the loan, 48, from cell G8.

**Rate** – The 2.4% represents the interest rate per annum. The value in G6 is divided by 12 to get the monthly interest. = G6/12.

**pv** – The present value, or the total loan amount. This is $2500 from cell G5.

**Start period** – This is the first period of interest. In this instance, it is 1 since we are calculating principal over the entire loan term.

**End period** – This is the last period of interest. In this case, it is 48 for the full loan term.

*Figure 1. Calculate cumulative loan interest*

With all these inputs, the “**CUMIPMT**” function returns -53.3989 as the the total interest over the loan term.

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