About the Line of Credit Calculator
This line of credit calculator shows what a personal, business or home equity line of credit (LOC) will cost at each stage. Most credit lines have a draw period, when you can borrow and usually only have to pay the interest, followed by a repayment period, when the balance is converted into a fixed amortizing payment. The jump between the two is where many borrowers get surprised.
Enter the balance you expect to carry, the variable rate you are being charged and the length of each period. The calculator shows the interest-only payment, the higher principal-and-interest payment that follows, and the total interest over the life of the line. It is useful for small-business owners planning working capital, homeowners using a HELOC for a renovation, and anyone comparing a credit line with a fixed personal loan.
It assumes the balance stays constant during the draw period, you pay only interest, and the rate does not change. Real LOC rates are usually variable, so try a higher rate to stress-test your budget.
With the default inputs, the monthly payment during draw period is $197.92. Change any value above to recalculate instantly.
How to use the line of credit calculator
- 1Enter the balance you plan to draw and carry on the line.
- 2Enter the current APR (use a higher rate to test a rate rise).
- 3Set the draw period during which you pay interest only.
- 4Set the repayment period and compare the two monthly payments.
Formula and method
During the draw period the calculator assumes you pay only the interest that accrues each month: the balance drawn multiplied by the monthly rate (APR ÷ 12). Because no principal is repaid, the balance at the end of the draw period is the same as at the start.
When the repayment period begins, the remaining balance is amortized over n monthly payments using the standard loan payment formula, so it is fully repaid by the end. Total interest is the interest-only payments plus the interest portion of the amortizing payments. Rates are held constant; real LOC rates usually float with the prime rate.
- B
- Balance drawn on the line
- r
- Monthly interest rate (APR ÷ 12 ÷ 100)
- n
- Repayment period in months
Worked examples
$25,000 personal LOC at 9.5%: 5-year draw, 10-year repay
Interest-only on $25,000 at 9.5% is $197.92 a month for five years. When repayment starts, the payment jumps to $323.49 for ten years. Total interest comes to about $25,694 — more than the amount borrowed, because nothing is repaid during the draw period.
$50,000 HELOC at 8.25%: 10-year draw, 20-year repay
A $50,000 home equity line costs $343.75 a month interest-only for ten years, then $426.03 a month for twenty years. Carrying the full balance for 30 years adds about $93,498 of interest.
$10,000 business line at 12%: 2-year draw, 3-year repay
At 12% the interest-only payment on $10,000 is $100 a month. The three-year repayment payment is $332.14, and total interest is about $4,357.
Frequently asked questions
How is a line of credit payment calculated?+
During the draw period most lenders require at least the interest: balance × APR ÷ 12. Some also require 1%–2% of the balance. In the repayment period the balance is amortized like a normal loan over the remaining term.
What is the difference between a line of credit and a loan?+
A loan gives you a lump sum with a fixed payment from day one. A line of credit lets you borrow, repay and borrow again up to a limit, and you only pay interest on what you have actually drawn.
Are line of credit rates fixed or variable?+
Most personal, business and home equity lines have variable rates tied to the prime rate plus a margin, so your payment can change. Some lenders offer an option to lock part of the balance at a fixed rate.
Can I pay off a line of credit early?+
Usually yes. Paying principal during the draw period lowers the balance, the interest and the later repayment payment. Check for closing or early-termination fees, which are common on HELOCs.
Does a line of credit affect my credit score?+
A revolving line of credit counts toward your credit utilization, so a high balance relative to the limit can lower your score. Opening one adds a hard inquiry, and late payments hurt your score on any type of account.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.