Interest-Only Loan Calculator
Compare the early interest-only payment with the later repayment once amortization begins. This is useful when a low first payment looks attractive but you need to see the full cost and the later jump.
Formula: Interest-only payments cover interest first, then the unchanged balance amortizes across the remaining term once principal repayment starts.
Why this structure feels easier at first
Because no principal is being repaid in the opening period. That keeps the payment down, but it also means the balance is not moving much at all.
What to look for
Focus on the later payment and the total interest, not just the first-period affordability. Those are usually the numbers that reveal the real tradeoff.
Interest-only loan FAQ
What is an interest-only loan?
It is a loan structure where the borrower pays only interest for an initial period before principal repayment begins.
Why does the later payment jump?
Because the same balance has to be repaid over fewer remaining periods once the interest-only window ends.