How margin loan interest is charged
A margin loan has no term and no fixed instalments. Interest builds up each day on the balance you owe and is usually billed once a month. So the interest for a period is the balance times the yearly rate times the days, divided by the days in the interest year.
Brokers differ on that last number. Many use 360 days and some use 365, so the page lets you choose. A 360-day year charges slightly more over a full year, because 365 days are divided by 360.
Worked example: 50,000 at 8% for 30 days
On a balance of 50,000 at 8% a year for 30 days on a 360-day year, the interest is 333.33, or 11.11 a day. That is 8.11% over a full 365-day year. On a 365-day year the same loan costs 328.77, or 10.96 a day. Over 365 days a 10,000 loan at 6% costs 608.33 on a 360-day year, not 600.00.
Rate tiers: blended or whole balance
Some brokers charge a lower rate on bigger balances. You can enter up to three tiers. Blended means each slice of the balance is charged at its own tier's rate. Whole balance means the entire balance is charged at the rate of the tier it falls in. Brokers describe this in different ways, so check your broker's rate table or agreement to see which one applies.
As an example, take a balance of 250,000 for 60 days with a first tier up to 25,000 at 9%, a second up to 100,000 at 8% and a third above that at 7%. Blended, the interest is 3,125.00, which is 7.50% on the whole balance. Charged whole at the third tier's 7%, the same balance costs 2,916.67 for 60 days. A balance exactly equal to a tier's limit is treated as being in that tier.
The margin call level
Your broker sets the minimum equity share it requires, called the maintenance margin. A margin call happens when the portfolio falls to the loan divided by one minus that share. With a 50,000 loan and a 30% maintenance margin, that is 71,428.57. A portfolio of 100,000 is 28,571.43 above that level, so a fall of 28.57% would trigger a call. Your equity today is 50.00% of the portfolio.
If you hold 1,000 shares of one stock, the share price that triggers the call is 71.43. A 25% maintenance margin on the same loan gives 66.67 a share. Enter your own broker's figure: brokers set their own, and this page does not assume a minimum.
What this calculator leaves out
It does not compound posted interest into the loan, apply different requirements to individual holdings, or include trading fees or tax. Margin loans are demand loans, so your broker can usually ask for more money or sell your holdings. For tax on the interest and on your gain, use the margin loan tax calculator.
For the UK tax treatment, use the margin loan tax calculator.
Use the right country page
This page works for any currency. For UK and US wording and a starting day count, use the country pages.
For the UK, open the UK margin loan interest calculator.
For the US, open the US margin loan interest calculator.
Inputs for the margin loan interest calculator
Days in the interest year
The divisor for the daily rate, 360 or 365. Your broker's agreement says which.
Rate tiers
One rate, or two or three tiers by balance. With tiers, choose blended or whole balance and enter each tier's limit and rate.
Margin loan balance
How much you owe the broker, assumed level for the whole period.
Margin interest rate (per year)
The yearly rate your broker charges. With tiers, this is the rate on the first tier.
Days borrowed
How many days you hold the loan.
Portfolio value
The market value of everything held in the account, used for the margin call level.
Maintenance margin
The least equity share your broker requires. Brokers set their own, so check yours.
Shares held in one stock (optional)
To see a margin call price per share. Enter 0 to skip.
CALCULATOR QUESTIONS
Margin loan interest calculator questions
How is margin loan interest calculated?
Daily, on the balance you owe: balance times the yearly rate divided by 360 or 365. On 3,000 at 5%, 30 days cost 12.50 on a 360-day year.
Is a 360-day or 365-day year used?
It depends on the broker. Several US brokers divide by 360, and others use 365. Check your agreement and set the day count to match.
Are margin rates tiered?
Many brokers lower the rate for larger balances. Whether each slice is charged at its own rate or the whole balance at one rate varies, so check how your broker applies it.
What is a margin call?
A demand to add money or securities, or have holdings sold, when your equity falls below your broker's maintenance level.
Is margin interest tax deductible?
It depends on the country and your circumstances. This page does not work out tax: see the margin loan tax calculator.