How the repayment is worked out
This calculator finds the equal monthly repayment on a loan taken to invest. The US page takes the note rate and charges it monthly at one twelfth of the yearly rate. On $50,000 at 7% over 5 years the repayment is $990.06 a month, $59,403.60 in all, of which $9,403.60 is interest. The 7% is only an example: enter the rate from your loan.
A published check: B2B Bank's investment loan calculator gives $990.06 a month on $50,000 at 7% over 5 years. This calculator gives $990.06.
Repay the loan or invest
If you have a lump sum, you can use it to pay down the loan or invest it. This compares the two. Paying $10,000 off the $50,000 loan while keeping the same payment clears the loan after 46.2 months instead of 60, saving $3,654.92 in interest. You then invest the freed-up payment until the original end date. At an example 8% return with no tax that is worth $14,252.70. Investing the $10,000 now and keeping the loan for the full term would be worth $14,898.46, so investing comes out $645.76 ahead.
Tax changes the answer. With 24% tax on the return, repaying is worth $14,106.36 and investing $13,542.29, so repaying the loan comes out $564.07 ahead. When the after-tax return equals the loan rate the two are level: with a 7% return and a 7% loan both are worth $14,176.25.
This is a comparison of two cash flows, not a recommendation. The loan saving is certain; the investment return is not. The return is your own assumption, taxed as a flat percentage, and returns can be lower or negative.
What a monthly budget could borrow
Enter what you can pay each month to work backwards. A budget of $1,000 a month at 7% over 5 years could repay a loan of up to $50,501.99.
What this calculator leaves out
It assumes a fixed rate, equal monthly payments, and that any lump sum is paid in at the start. It ignores fees, early repayment charges and the loan's tax treatment. A margin loan or securities-backed line of credit has no fixed term and a variable rate.
To see only the interest, use the interest only investment loan calculator.
For the UK version, open the UK investment loan repayments calculator.
Inputs for the investment loan repayments calculator
Loan balance
The amount you owe on the loan taken to invest.
Interest rate
The yearly note rate, charged monthly at one twelfth. The 7% shown is only an example.
Loan term
How long you have left to repay the loan.
Monthly budget for repayments
What you can afford each month, to see how much that could borrow.
Lump sum to use
Money you could use to repay the loan or invest. Enter zero to skip the comparison.
Return you expect on the investment
Your own yearly assumption before tax. It is not a forecast.
Tax on the investment return
The share of the return paid in tax, from your own position. Enter zero if none.
CALCULATOR QUESTIONS
US investment loan repayments calculator questions
How are investment loan repayments calculated?
With the standard loan formula: equal monthly payments that repay the loan and interest. $50,000 at 7% over 5 years is $990.06 a month.
Should I repay the loan or invest the lump sum?
It depends on whether the after-tax return you can expect beats the loan rate, and on how much risk you accept. This calculator compares the two for the figures you enter.
Why does tax change the answer?
Tax lowers the return you keep. On the example, a 24% tax rate moves the result from investing $645.76 ahead to repaying $564.07 ahead.
Can I afford this loan?
A monthly budget of $1,000 at 7% over 5 years could repay up to $50,501.99.
Is the investment return guaranteed?
No. The loan has to be repaid whatever the investment does.