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Add-On Borrowable Amount Calculator

Enter your monthly payment, add-on annual rate, and repayment term to back-solve the borrowable principal under the add-on interest method. It also shows total repayment, total interest, and an approximate effective APR.

Input

$
%

How to set the repayment term

yr

Result

Borrowable principal ($30,000.00/month, 60 payments)

$1,285,714.29

Total repayment

$1,800,000.00

Total interest

$514,285.71

Ref. effective APR

approx. 14.13 %

How it works

  • The add-on interest method calculates interest as "principal x add-on annual rate x repayment years" on the original principal, adds it to the principal to get the total repayment, and divides that total by the number of payments to set the monthly amount. Unlike the effective-APR method, where interest shrinks as the balance falls, add-on interest always uses the original principal.
  • This tool back-solves the borrowable principal from your monthly payment. It first finds the total repayment as "monthly payment x number of payments." The term can be set either in years (multiplied by 12 to get the number of payments) or directly as a number of payments.
  • It then solves the add-on relationship "total repayment = principal x (1 + add-on rate / 100 x repayment years)" for the principal, giving "principal = total repayment / (1 + add-on rate / 100 x repayment years)."
  • Total interest is shown as "total repayment - borrowable principal." Because the add-on method assumes constant interest even as the loan is paid down, the total interest tends to be larger than under the effective-APR method.
  • The reference effective APR is found by solving for the monthly rate that satisfies the present-value formula for equal repayments, "principal = monthly payment x (1 - (1 + monthly rate)^-payments) / monthly rate," using the bisection method, then multiplying the monthly rate by 12 and expressing it as a percentage. It is typically higher than the add-on rate.
  • Note: displayed amounts are rounded approximations and the effective APR is also an approximation. Actual borrowable amounts, payments, and rates vary by a lender's screening criteria, fees, and rounding. Make any final decision at your own discretion.