Add-On Interest Loan Calculator

About this calculator

An add-on interest loan calculates interest on the full original principal for the entire loan term, then adds it to the principal upfront: Total Interest = Principal × Rate × Term (in years), and the resulting Principal + Interest is simply divided by the number of payments to get the monthly installment. Unlike a standard amortizing loan, the interest doesn't shrink as the balance is paid down — you're charged as if you owed the full amount the whole time, even in the final month when you actually owe very little.

Because of this, the effective APR of an add-on loan is roughly double its stated add-on rate — an 8% add-on rate on a loan repaid in equal installments behaves like a ~15–16% APR amortizing loan. This structure is still common in short-term consumer financing, retail installment contracts, and some auto/furniture financing, so borrowers comparing loan offers and consumer-finance regulators use this calculator to convert an advertised add-on rate into its true total cost before signing.