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Interest Only Loan Calculator

Moneyzine Editor
Author: 
Moneyzine Editor
2 mins
October 4th, 2023
Advertiser Disclosure

You can use this interest-only loan calculator to figure out your monthly payments, if you decide to take out an interest-only loan. Although this type of loan is more common with mortgages, consumers can find lenders willing to write these kinds of loans to meet a variety of financing needs.

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

Total Loan Amount ($)

The total loan amount is the net amount financed with the lending institution. This value is used as the basis for all subsequent monthly loan payment calculations.

Annual Interest Rate (%)

This is the annual interest rate on the personal loan. This is not the APR, which takes into account other costs associated with the loan.

Term of the Loan (Years)

This is the original term or length of the personal loan, stated in years. The most common terms for personal loans range from 3 to 10 years, however there may be certain restrictions when it comes to interest-only loans.

Monthly Payment ($ / Month)

This is the monthly payment necessary to repay the loan over its lifetime.

Interest Only Payment ($ / Month)

This is the monthly payment that is necessary for an interest-only loan. With this type of loan, the principal balance never declines, and is payable at the end of the loan's term.

Monthly Savings ($ / Month)

This is how much money you can save on your monthly payment by taking out an interest-only loan.

Total Savings on Monthly Payments ($)

This is how much you can save on your monthly payments over the term of the loan by making interest-only payments. Keep in mind that since the principal balance never declines, the total loan balance would also be payable at the end of this loan's term. On the one hand, interest-only loans allow you to save money on your monthly payments. However, your total interest paid will be higher than a standard loan because the loan's principal never declines.

Interest Paid with Each Loan ($)

The Interest Paid with Each Loan type illustrates the downside of an interest-only loan. Since the principal balance never declines, you are effectively borrowing more money over a longer period of time. For this reason, the interest expense will be higher.


Interest Only Loan Calculator


Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.

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