How it works
Monthly payment = principal × annual rate / 1200. Principal remains outstanding and is due after the interest-only period.
Input definitions
- Principal
- Enter the value in the labeled unit.
- Nominal annual rate (%)
- Enter the value in the labeled unit.
- Interest-only months
- Enter the value in the labeled unit.
A worked example
- Principal
- 10000
- Nominal annual rate (%)
- 6
- Interest-only months
- 12
Assumptions & limits
Entered single-currency amounts and fixed rates; monthly interest and two-decimal half-up rounding. No tax, lending approval, changing rates or live market data.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-17. Content checked against the stated method and examples. Our verification approach.
Common questions
Do interest-only payments reduce the loan balance?
No. In this model each regular payment covers only interest. The original principal still needs repayment or refinancing at the end.
How does Interest-only loan payment plan work?
Monthly payment = principal × annual rate / 1200. Principal remains outstanding and is due after the interest-only period.
What are the limits of Interest-only loan payment plan?
Entered single-currency amounts and fixed rates; monthly interest and two-decimal half-up rounding. No tax, lending approval, changing rates or live market data.