Interest-Only Loan Calculator
See how much lower the payment is, and what you still owe at the end.
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Interest-Only Loan Calculator by TheCalcTools
How the Interest-Only Loan Calculator works
Enter the loan amount, annual rate and the term.
An interest-only payment covers only the interest, so the balance does not fall.
The amortizing payment includes principal and repays the loan fully by the end.
The formula
Worked example
Using the default values shown in the calculator:
| Loan amount | $250000 |
|---|---|
| Interest rate (APR %) | 6 % |
| Term (years) | 30 |
- Monthly rate = 6% ÷ 12 = 0.5%.
- Interest-only payment = 250,000 × 0.005 = $1,250.00.
- A fully amortizing loan costs $1,498.88 a month but the balance reaches zero.
Result:
| Interest-only payment | $1,250.00 |
|---|---|
| Amortizing payment for comparison | $1,498.88 |
| Total interest, interest-only | $450,000 |
| Total interest, amortizing | $289,595 |
| Balance still owed at the end of interest-only term | $250,000 |
Frequently asked questions
What are the risks of interest-only loans?
You build no equity from payments, and the full balance (or a much higher payment) becomes due when the interest-only period ends.
Why would someone choose one?
Lower early payments can help cash flow for investors or borrowers expecting higher income, but it costs more overall.
Sources and further reading
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This calculator gives estimates for information only. It is not financial advice, and your lender's or provider's figures will govern. Rates, fees and rules vary. See our disclaimer.