Loan Interest Calculator
This calculator answers one question: what does the money itself cost? Enter the amount borrowed, the annual interest rate and the term in years, and it returns the interest that accrues over that term, kept separate from the principal you would repay.
$1,957.15 of interest
The simple-interest figure is shown only to make the point that an amortising loan charges interest on a shrinking balance, so it costs less than rate × principal × years.
What the arithmetic does
The calculator separates the cost of borrowing from the repayment of it. The amount borrowed is the principal, the sum you receive and eventually hand back. The annual interest rate is the price charged for having it. The interest figure is that price expressed in dollars over the term you entered. The output is not a payment schedule and not a balance. It is a single number for the cost of the money.
In words, the formula works like this. Take the amount borrowed, multiply it by the annual rate written as a decimal, and you have the cost of one year at that rate. Repeat that charge for each year of the term and add the years together. Three inputs drive the whole result. A larger amount borrowed raises the total, a higher annual rate raises it faster, and a longer term multiplies it. Double the rate with nothing else changed and the interest figure doubles. Double the term with nothing else changed and it doubles as well.
One wrinkle matters more than the rest. If you pay the balance down as you go, interest is charged on a shrinking balance rather than a fixed one, and the real total will be lower than the arithmetic above produces. A calculator that takes only an amount, a rate and a term cannot know your payment schedule. Treat the result as the cost of holding that balance at that rate for that long: the upper edge of what the money costs, not a schedule of what you will pay.
What each input means
- Amount borrowed — the principal advanced to you, before fees are added or subtracted. Where a lender adds an origination or administration charge to the balance, the amount you actually owe is larger than the number you type here.
- Annual interest rate (%) — the nominal annual rate, entered as a percentage. Put in the contract rate, not a headline annual percentage rate you may have seen quoted elsewhere, because the two are built differently. If the rate is variable, the number you enter is only the rate as of today.
- Term (years) — how long the balance stays outstanding. On a mortgage this is the amortization period, not the mortgage term between renewals, and those two are not the same thing.
What the result assumes
Every figure the calculator produces rests on four assumptions, and each of them can be wrong in your case. It assumes the rate you entered stays fixed for the whole term. It assumes no fees, insurance premiums or penalties are added to the balance. It assumes interest is charged on the full amount for the full period. And it assumes no payments reduce the balance along the way.
Compounding is the assumption most often left unspoken. Canadian fixed-rate mortgages are compounded semi-annually by law, which means the annual rate you type is not quite the rate applied month to month, and other products compound on their own schedules. There is also a legal ceiling worth knowing: the Criminal Code criminal rate of interest is 35% per year under section 347 of the Criminal Code, though that ceiling says nothing about where inside it your own rate would land.
For mortgages at federally regulated lenders, affordability is tested at the greater of the contract rate plus two percentage points and 5.25% under OSFI Guideline B-20. That is a stress test of what you can carry, not the rate you pay, and insured mortgages and provincially regulated lenders are not all subject to it. It tells you why the amount you qualify for can be smaller than the amount you asked about.
What the calculator cannot tell you
loanmoose.ca is not a lender. It does not make loans, set rates or make credit decisions, and nothing on this page is an offer or an approval. The calculator cannot tell you what rate you will be offered, because that turns on a lender's underwriting, your credit history, your income, your existing debts and any security behind the loan. Lending in Canada is licensed provincially, so the regulator and the rules differ by province and territory; the list of provincial and territorial regulators is where to confirm who supervises a given lender.
Use the output as a comparison tool. Run the same amount at two or three rates you have actually been quoted, or at a rate you can point to on a document, and the difference between the totals is the part of the decision that matters. Where a fee is involved, ask the lender for the total cost of borrowing instead, because that number folds the fees into the arithmetic and this one does not.
Frequently asked questions
Does the calculator show the rate I would actually be offered?
No. It only does arithmetic on the three numbers you type. loanmoose.ca is not a lender and does not make credit decisions, so it cannot know what any lender would quote you. The rate you are offered depends on your credit history, income, existing debts, the security behind the loan and the lender's own underwriting rules. Enter a rate you can point to on a real document rather than a guess.
Why does my real interest total differ from the calculator's figure?
Three reasons usually explain it. Fees such as origination or administration charges are often added to the balance, so you pay interest on more than you borrowed. Payments made during the term shrink the balance, so the real total comes out lower. And compounding conventions vary, since Canadian fixed-rate mortgages are compounded semi-annually by law while other products compound on a different schedule. Each of the three moves the number.
Is there a legal maximum interest rate in Canada?
The Criminal Code sets a criminal rate of interest of 35% per year under section 347. Beyond that ceiling, lending is licensed provincially, so the regulator and the specific rules differ by province and territory. None of this tells you what rate you personally would be offered, and a rate below the ceiling can still be expensive relative to your own budget.
How do payday loans fit into this?
Where a province operates a licensed payday lending regime, the federal Payday Lending Regulations cap the cost of borrowing at $14 per $100 advanced, and some provinces set a lower cap that then applies. Quebec does not license payday lending, which effectively prohibits the model there. A payday loan is generally up to $1,500 for a term of 62 days or less, so a calculator built around years does not describe it well.
Does a longer term make a loan cheaper?
It lowers the payment and raises the interest, almost always. Stretching the same balance over more years means each payment carries less principal and more of the cost of the money. A longer term only lowers your total interest if it comes attached to a lower rate, which is not automatic. Compare total cost over the full term, not the monthly payment on its own.
Does the calculator include fees, insurance or penalties?
No. It works from three inputs only: amount borrowed, annual interest rate and term in years. Fees, insurance premiums, penalties and discharge costs sit outside the arithmetic entirely, and some of them get added to the balance so that you pay interest on them as well. Ask a lender for the total cost of borrowing when you want the fuller figure.
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