See what a business, personal or home equity line of credit will cost. Enter the limit, rate, draw and repayment periods and how you plan to draw. You'll get the payment during the draw period, the payment once repayment starts, total interest and a schedule.
Last updated:
Credit line
$
%
Usually variable: prime + a margin.
months
How long you can borrow from the line.
months
0 if the balance is due when the draw period ends.
$
Your draws
$
$
draws
Draws stop at the credit limit.
Draw-period payments
Payment during the draw period
% of balance
Enter your values to see the result.
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How to use the Line of Credit Calculator
Enter the credit limit, interest rate and any annual fee.
Set the draw period and repayment period in months.
Describe your draws: a first draw and an optional amount drawn each month.
Choose the draw-period payment: interest only, or interest plus a percentage of the balance.
Review the payments, peak balance and total interest, and download the schedule.
How a line of credit is paid back
A line of credit (LOC) lets you borrow up to a limit, repay and borrow again, and pay interest only on what you have actually drawn. Business lines of credit, personal lines and home equity lines (HELOCs) work in two phases:
Draw period: you can take money out. Payments are often interest only: monthly payment = balance × APR ÷ 12. Some lines require interest plus a small percentage of the balance, such as 1% to 2%.
Repayment period: borrowing stops and the balance is paid off in equal monthly payments, P = B × r ÷ (1 − (1 + r)−n), where B is the balance when the draw period ends, r the monthly rate and n the number of months. Some short business lines skip this phase: the balance is due, or must be renewed, when the term ends.
Because you draw over time, the balance and the interest-only payment grow with each draw. Payments often jump when the repayment period starts. This calculator models a first draw plus regular monthly draws up to your limit, so you can see the whole path.
Interest-only vs. repayment payments at 9.5% APR
Balance
Interest-only payment
Repaid over 5 years
Repaid over 10 years
$10,000
$79.17
$210.02
$129.40
$25,000
$197.92
$525.05
$323.49
$50,000
$395.83
$1,050.09
$646.99
$100,000
$791.67
$2,100.19
$1,293.98
Many lenders work out interest daily on the average balance (APR ÷ 365 × days). The monthly figures here are a close approximation. Rates on most lines are variable, so payments change when the prime rate moves.
Tips for using a line of credit
Draw only what you need. You pay interest on the balance, not the limit, so an unused line costs little apart from any annual or maintenance fee.
Pay principal during the draw period if you can. Interest-only payments keep the balance, and the later repayment payment, high.
Plan for the payment jump. Budget for the repayment-period payment before the draw period ends.
Watch rate changes. A 1-point rise in prime adds about $42 a month in interest on a $50,000 balance.
Check renewal terms on business lines. Many are reviewed yearly and can be reduced or frozen.
Frequently asked questions
How is a line of credit payment calculated?
During the draw period most lines charge interest only: balance × APR ÷ 12. A $25,000 balance at 9.5% costs about $197.92 a month. Once repayment starts, the balance is amortized: $25,000 over 5 years at 9.5% is about $525.05 a month.
Do I pay interest on the whole credit limit?
No. Interest is charged only on the amount you have drawn and still owe. The unused part of the limit costs nothing, though some lenders charge an annual, maintenance or unused-line fee.
What is the difference between the draw period and the repayment period?
During the draw period you can borrow, and payments are often interest only. In the repayment period you can no longer borrow, and the balance is paid off with principal-and-interest payments. Payments usually rise when it starts.
How is a line of credit different from a loan?
A loan gives you one lump sum, and you pay interest on all of it from day one. A line of credit lets you borrow only what you need, when you need it, repay and borrow again, and you pay interest only on the outstanding balance.
What is a typical business line of credit term?
Many business lines have a 12- to 24-month draw period and are renewed each year, while some convert to a term loan of 1 to 5 years. HELOCs often have a 10-year draw and a 20-year repayment period.
How do variable rates affect my line of credit?
Most lines are priced at prime plus a margin, so the rate and payment change when prime moves. Each 1-point rise adds about $8.33 a month per $10,000 of balance in interest-only payments.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.