Loans Calculators · Canada
Line of credit payment calculator.
Enter your balance and rate to see the monthly and yearly interest first, then the payment, how long a fixed payment takes to clear the line, the total interest you will pay, and how a term loan compares.
A line of credit’s minimum payment is usually the interest only: balance × annual rate ÷ 12. On $25,000 at 8.5% that is $177.08 a month, and the balance does not shrink. To clear the line you need a fixed payment above that figure: $500 a month clears it in 62 months with about $5,971 of interest.
The number of months for a fixed payment is n = −ln(1 − r×B ÷ P) ÷ ln(1 + r), where B is the balance, r the monthly rate and P the payment. Use the rate on your statement (prime plus your spread).
Inputs
Your cost
Fill the form and press Calculate.
Interest-only vs fixed payment: what changes
Most lines of credit only require the interest each month. That keeps the payment low, but the balance never shrinks unless you pay more. The calculator shows both sides: the interest-only payment (balance × annual rate ÷ 12) and, with a fixed payment, how many months it takes to clear the line and how much interest you pay on the way.
Worked example 1: $25,000 at 8.5%
- Interest only: $25,000 × 8.5% ÷ 12 = $177.08 a month, about $2,125 a year, and the balance stays at $25,000.
- Fixed $500 a month: paid off in 62 months (5 years 2 months) with about $5,971 in interest.
- Fixed $800 a month: paid off in 36 months with about $3,358 in interest.
- 5-year term loan at the same rate: $512.91 a month, about $5,775 in total interest.
Worked example 2: $10,000 at 9%
- Interest only: $75.00 a month.
- Fixed $300 a month: paid off in 39 months with about $1,551 in interest.
- Fixed $600 a month: paid off in 18 months with about $723 in interest.
These figures assume a constant rate and monthly compounding. Real lenders usually calculate interest daily and the rate moves with prime, so your statement will differ slightly.
Line of credit vs loan
- Payment: a line of credit asks for interest only, so the payment is lower but the debt is not shrinking. A term loan has a fixed payment that clears the debt by a set date.
- Rate: lines of credit are normally variable (they move with prime). Term loans can be fixed or variable.
- Flexibility: you can re-borrow on a line of credit as you repay. A term loan is a lump sum you cannot draw on again.
- Cost: at the same rate, paying the same amount on a line of credit costs the same as the loan. The difference is discipline: the loan forces the payoff, the line does not.
Canadian prime rate note
Line of credit rates are usually quoted as prime plus a spread. Each bank sets its own prime rate, and by convention it follows the Bank of Canada policy rate. As of the Bank of Canada’s September 2, 2026 announcement the target for the overnight rate is 2.25%, and the next announcement is October 28, 2026. Major banks have generally kept prime about 2.2 percentage points above that target, which would put it near 4.45%, but that is an inference, so confirm the current prime rate and your spread on your lender’s rate page or your statement. Source: Bank of Canada, policy interest rate.
Lines of credit in Canada
A line of credit (LOC) is flexible revolving credit. You only borrow, and pay interest on, what you use, and you can re-borrow as you repay.
Types of lines of credit
- Personal LOC (unsecured): no collateral, typically a higher spread over prime.
- Secured LOC: backed by a home or investments, typically a lower spread and higher limits.
- HELOC: a home equity line. Federal rules cap the revolving part of a home-secured line at 65% of the home’s value.
- Business LOC: for operating expenses; rates depend on the business and its credit.
- Student LOC: for education, often prime or a small spread while in school.
How interest works
Interest is generally calculated daily on your outstanding balance and charged monthly. There is no interest-free grace period as on a credit card, so interest starts as soon as you borrow.
Line of credit calculator FAQ
How do I calculate a line of credit payment?
For an interest-only payment, multiply the balance by the annual rate and divide by 12: $25,000 at 8.5% is $177.08 a month. For a fixed payment that pays the line off, the months needed are -ln(1 - r x B / P) / ln(1 + r), where r is the monthly rate, B the balance and P the payment. $500 a month on $25,000 at 8.5% takes about 62 months.
What is the interest on a $10,000 line of credit?
At 8.5% a year, $10,000 costs $850 a year, or $70.83 a month, if the balance stays the same. Multiply your own balance by your rate to get the same figure.
How is line of credit interest calculated?
Balance × annual rate ÷ 365, added up for each day the balance is outstanding and billed monthly. This calculator uses balance × rate ÷ 12, which is close for a steady balance.
Why is the payoff time “payment too low”?
If your fixed payment is not more than the monthly interest, none of it reduces the balance, so the line never pays off. Raise the payment above the interest-only figure.
What happens when prime changes?
A variable-rate line of credit moves with prime. If your rate rises by one percentage point, the interest-only payment on $25,000 goes up by about $21 a month.
Can the lender change or recall my line?
Many lines of credit are payable on demand, so the lender can reduce the limit or ask for repayment. Check your agreement.
See also the line of credit vs personal loan calculator, the line of credit rate stress test, the payoff calculator with draws, the business line of credit calculator, the personal loan calculator, the early payoff calculator and the full list of loan calculators.
Disclaimer
This calculator provides estimates. Actual rates, limits, and terms vary by lender and borrower qualifications. LOC rates are variable and can change. Interest is generally only tax-deductible if funds are used for business or income-producing investments. Consult your financial institution for specific details.