Loan Interest Payment Calculator
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What is interest only loan?
It can be private student loans (like Sallie Mae college loans) which require you to make monthly payments that cover your interest while you are in school.
Or it can be federal student loans where you voluntarily decide to make these payments. (These would be unsubsidized Stafford loans- subsidized loans have no interest accruing while you are in school at least half-time.)
Government school loans have a fixed rate. Your interest only monthly payment will remain the same. Commercial loan interest rates are mostly variable and change monthly, quarterly or annually. They are linked to either the LIBOR or Prime rate.
For example, the rate might be 4.5 + LIBOR (capped at 10.5 + LIBOR). You will need to know what the LIBOR or Prime rate is for the payment to be accurate and it will change periodically.
Calculate Loan Interest
If you have a variable rate loan, make sure you enter the beginning rate and then use the calculator again to enter the loan cap rate. That way, you can get the starting payment, but you can also see how high the monthly payment might go.
If you plan to defer a loan for any reason, try to pay just the monthly interest while it is deferred. The calculator can help you see if this is an amount you can manage. The benefits of not deferring this interest are shown by the accrued interest calculator.
If you do not make these monthly payments, the capitalized interest is added to the principal balance of the loan and you will be paying interest on interest for the life of the loan.
Other calculators you might be interested in, are the:
Standard college loan repayment program calculator
Government school loans extended payment calculator
FFELP-Direct loans consolidation calculator (2010-2011 only)
Student loan consolidation calculator
The loan interest payment calculator should be used before you commit to paying these monthly amounts, so you can see if they are affordable.
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