See the first and last monthly payment and the total interest when a loan is repaid in equal principal instalments plus interest.
Many Canadian business term loans are repaid as fixed principal plus interest: the same slice of principal every month, plus interest on whatever balance is left. The first payment is the highest and payments fall each month. This calculator shows the first and last payment, the total interest and the year-end balances.
How it works. Monthly principal = loan amount / number of months. Interest each month = remaining balance x annual rate / 12. Total interest works out to roughly r x P x (n + 1) / 2, where r is the monthly rate.
Worked example (illustrative). $150,000 at 8.5% over 5 years means $2,500 of principal a month. The first payment is $2,500 + $1,062.50 of interest = $3,562.50; the last is about $2,517.71. Total interest is about $32,406, roughly $2,240 less than the same loan with blended payments, because the balance falls faster. The catch is the first year: payments start about $485 a month higher than the blended payment of $3,077.
Limits. The tool assumes one fixed rate and monthly compounding. Floating-rate loans change with prime. Some lenders offer seasonal or interest-only periods, which this tool does not model. Compare with the blended payment calculator. Defaults are illustrative.
Worked Examples and Checklists
A worked example of a Canadian business term loan repaid by blended payments and by fixed principal plus interest, year by year, with prepayment and term-versus-amortization explained.
