Use the **Loan Repayment Index (LRI) Calculator** to determine the total loan repayment cost, the original principal, the interest paid, or the derived repayment index score. Input any three known financial variables to solve for the missing fourth component.
Loan Repayment Index Calculator
Step-by-Step Calculation:
Loan Repayment Index Formula:
\text{Total Repayment Cost} (C) = \text{Principal} (P) + \text{Total Interest} (I)
\text{Repayment Index} (LRI) = \frac{\text{Total Repayment Cost} (C)}{\text{Principal} (P)}
Formula Source: Investopedia (LTV Principle used as proxy)
Key Variables Explained:
- **Original Loan Principal (P / F):** The amount initially borrowed. (Currency)
- **Total Interest Paid (I / P):** The total monetary cost of the loan (Principal is excluded). (Currency)
- **Total Repayment Cost (C / V):** The sum of the Principal and the Total Interest. (Currency)
- **Repayment Index (LRI / Q):** A ratio indicating the total cost of the loan relative to the original principal. An LRI of 1.5 means the borrower paid $1.50 for every $1.00 borrowed. (Ratio)
Related Calculators:
- Mortgage Amortization Schedule Builder
- Effective Annual Interest Rate Calculator
- Debt Service Coverage Ratio (DSCR) Calculator
- Net Present Value (NPV) Calculator
What is the Loan Repayment Index (LRI)?
The Loan Repayment Index (LRI) is a simplified metric used to quickly understand the total proportional cost of a loan. It is calculated by dividing the total amount repaid (Principal + Interest) by the original principal amount. This ratio is useful for comparing the efficiency and long-term cost of different financing options, such as 15-year versus 30-year mortgages.
A high LRI (e.g., 2.0 or higher) suggests a significantly expensive loan, likely due to a high interest rate, a long loan term, or both. A ratio closer to 1.0 indicates a low-cost or short-term loan.
How to Calculate LRI (Example)
- Determine the Original Loan Principal (P – F). Assume $\text{P}=\$100,000$.
- Determine the Total Interest Paid (I – P). Assume $\text{I}=\$50,000$.
- The Total Repayment Cost $(C)$ is calculated: $C = P + I = \$100,000 + \$50,000 = \$150,000$.
- The Repayment Index $(LRI)$ is calculated: $LRI = \frac{C}{P} = \frac{150,000}{100,000} = 1.5$.
- The resulting Loan Repayment Index is $\mathbf{1.50}$.
Frequently Asked Questions (FAQ)
What does an LRI of 1.0 mean?
An LRI of 1.0 means that the Total Repayment Cost (C) exactly equals the Original Principal (P). This would imply a 0% interest rate loan, where no interest was paid.
Can the LRI be less than 1.0?
No. In a standard loan scenario, the Total Repayment Cost (C) includes the Principal (P) plus non-negative interest (I). Therefore, C will always be greater than or equal to P, meaning the LRI will always be $\geq 1.0$.
How can I solve for the Principal (F)?
If you know the Total Repayment Cost (V) and the Repayment Index (Q), the Principal (F) can be solved by rearranging the index formula: $P = C / LRI$.
Is LRI a standard financial metric?
The LRI is a simplified, derivative metric based on standard financial components (Principal and Interest). It is useful for high-level comparison but is not a formally mandated regulatory metric like APR or APY.