Simple interest, interest-only payments, HELOC costs, and policy loan balances — calculated instantly.
Simple interest is calculated only on the original principal: I = P × r × t. Borrow $20,000 at 10% for 3 years and you owe exactly $6,000 in interest — no compounding, no shifting payment split.
Amortized loans (mortgages, auto loans) work differently: interest is recalculated monthly on the remaining balance, so early payments are interest-heavy. Simple interest is common for short-term personal loans, promissory notes, and loans between individuals.
If your loan has a fixed monthly payment that pays it down to zero, it's amortized — use our Loan & Mortgage Calculator for that.
An interest-only payment is just balance × rate ÷ 12. On $100,000 at 8%, that's about $667/month. It's the cheapest possible payment — but the principal never shrinks.
Interest-only structures appear in HELOCs during the draw period, bridge loans, some investment property loans, and margin loans. They make sense for short holding periods or when cash flow matters more than payoff.
The risk: when the interest-only period ends, payments jump sharply because the full balance must then be repaid in less time.
A home equity line of credit has two phases. During the draw period (typically 10 years) you borrow as needed and usually pay interest only. During the repayment period (typically 10–20 years) the outstanding balance amortizes into much larger principal-and-interest payments.
Payment shock is real: a $100,000 balance at 8.5% costs ~$708/month interest-only, but ~$985/month once amortized over 15 years. Most HELOCs also carry variable rates, so payments can rise further.
Use the HELOC tab above to see both phases side by side before you borrow.
A policy loan borrows against your whole life or universal life policy's cash value. There's no required payment schedule and no credit check — but interest (typically 5–8%) accrues and compounds annually.
Left unpaid, the balance grows exponentially. If it ever exceeds your cash value, the policy can lapse — potentially triggering income tax on the gain and ending your coverage. Any outstanding balance is also deducted from the death benefit.
The Policy Loan tab above projects your balance year by year and flags when it approaches your cash value. Paying just the annual interest keeps the balance frozen and the policy safe.