User talk:Winston yang/How much total interest do you pay on a loan?

Multiple issues to resolve
1. This article derives a math formula. The Bogleheads wiki follows Wikipedia policy. As stated in Wikipedia's No original research policy, you must be able to cite a source. Creating a formula that is not verifiable from an external source does not comply with this policy.

2. The intent of this page is to provide guidance for the general loan case. The example is based on a mortgage loan, which has several exceptions. It is important to account for these discrepancies.

There needs to be a section which clearly explains how Total Interest Percentage should not be confused with APR. Also, that Total Interest Percentage for mortgage loans does not include upfront fees other than prepaid interest (the cautions noted in What is the Total Interest Percentage (TIP) on a mortgage?).

3. Stating that the example results are "slightly more" than the cited value ("The Consumer Financial Protection Bureau calculates a total-interest percentage of 69.45 %, which is slightly more than our value.") does not validate the proof. A difference of 7.16% is significant.

4. Please cite the source of the spreadsheet used to create the tables. Suggestion: Reduce the table size to 30 years / 12% rate, which is appropriate for a mortgage.

This page can be promoted to the main namespace after these issues are resolved. --LadyGeek 09:24, 1 November 2022 (EDT)

Alternative method
The total interest over the life of a loan can be calculated as ((total amount of payments) - loan amount). Here's a very simple and clear explanation of an amortization schedule which shows an example: Loan amortization - TBS open teaching

From the example: A 5-year $5,000 loan at 20% interest results in an annual payment of $1,671.90. Over 5 years, the total payment is $8,359.50 = (5 * $1,671.90). The cost of this loan, i.e. the interest you paid, is therefore $3,359.50 = ($8,359.50 - $5,000).

This method should be added to the page. --LadyGeek 18:54, 1 November 2022 (EDT)