Interest Only Payment
Calculate the interest-only monthly payment on a balance.
About Interest Only Payment
An interest-only payment covers only the monthly interest and does not reduce the principal. It is the minimum required to keep a balance from growing. Interest-only payments can ease cash flow, but paying nothing on principal means the debt balance never shrinks.
Formula
Interest Only Payment
Interest payment = balance x monthly rate
- monthly rate
- annual rate divided by twelve
Worked example
With the default values below, Interest Only Payment returns Interest Only Payment of $1,000.00. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Loan amount
- 200,000
- Annual rateaccepts 0–100 %
- 6 %
Results
- Interest Only Payment
- $1,000.00
- Annual Interest
- $12,000.00
- Monthly Rate
- 0.500%
Step by step
- 1Values used
- 2Interest Only Payment
- 3Interest Only Payment= 1,000.00
- 4Annual Interest= 12,000.00
- 5Monthly Rate= 0.500
Assumptions and limits
- The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or fees or charges into account.
- Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Interest Only Payment calculated?
Interest payment = balance x monthly rate An interest-only payment covers only the monthly interest and does not reduce the principal. It is the minimum required to keep a balance from growing.
Why does Interest Only Payment matter?
Interest-only payments can ease cash flow, but paying nothing on principal means the debt balance never shrinks.
What values do I need to enter?
This calculator takes 2 inputs: Loan amount, Annual rate. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.