Line of Credit Calculator Canada (2026): Interest and Payment Estimates

This calculator estimates the interest and payments on a line of credit. In Canada, line of credit interest is calculated daily on the outstanding balance and charged to the account monthly, so the timing of each payment changes what you pay. It is one of the calculators in the personal loans and lines of credit hub.

How Interest on a Line of Credit Is Calculated

The daily interest formula is:

$$\text{Daily Interest} = \text{Outstanding Balance} \times \frac{\text{Annual Interest Rate}}{365}$$

Worked Example: Daily Interest

Because interest accrues daily, a payment made mid-month lowers that month’s interest right away.

How a Line of Credit Works

A line of credit (LOC) gives you access to money up to an approved limit. Unlike a personal loan, which pays out a lump sum, a line of credit is revolving: you can borrow, repay and borrow again as often as you need.

While a balance is outstanding you must make at least the minimum payment. On many lines of credit that is the interest owed; on others it is the greater of the interest owed or a small percentage of the balance (often 2–3%).

Line of credit rates in Canada are usually the lender’s prime rate plus a spread, so they are variable: when the Bank of Canada changes its policy rate, prime and your line of credit rate move with it. On a large balance, even a small rate change shifts the monthly interest noticeably.

Rates to Enter in the Calculator

With prime at 4.45%, a HELOC is typically prime + 0.5% to 1% and an unsecured line prime + 1.5% to 5% or more, depending on your credit score and the lender. Current spreads by lender and by credit score are on the line of credit rates page, and HELOC rates and limits on best HELOC rates in Canada.

Secured vs Unsecured Lines of Credit

A secured line of credit is backed by collateral, most often your home in the form of a home equity line of credit, which a HELOC calculator models on its own. Because the lender has security, the rate is lower and the limit higher, but the home is at risk on default. An unsecured line of credit relies only on your creditworthiness, so its rate is higher and its limit lower, with no asset at risk; secured vs unsecured loans explains the trade-off in general.

Choosing a Line of Credit or Something Else

The calculator assumes a revolving balance with interest charged daily from the day of each draw. A personal loan with fixed payments, or a credit card with a grace period on purchases paid in full, works differently: personal loan vs line of credit vs credit card compares all three with repayment tables, and the credit cards section has a separate page on line of credit vs credit card.

Managing a Line of Credit

A personal ceiling. A $30,000 limit doesn’t have to be used; keeping your own ceiling well below it leaves room for emergencies.

Payments above the minimum. When the minimum covers only interest, the balance never falls; only payments above it reduce the principal.

A repayment plan for each draw. Deciding in advance how many months a draw will take to repay, and paying on that schedule, makes a line behave like a loan.

Watching prime. Since the rate is variable, prime rate changes flow straight into the interest. A sustained rise is the point at which some borrowers pay the balance down faster or move it to a fixed-rate personal loan.

Daily expenses. A line of credit that is covering everyday living costs is usually a sign the budget needs a look rather than more credit.

Credit utilization. Using a high share of your available credit can lower your credit score; many borrowers keep utilization below about 30% of the limit.

To plan repayment across several debts at once, the debt payoff calculator compares payoff orders, and how loan interest is calculated explains compounding and amortization.

Personal loan payments

This personal loan calculator works out the regular payment on a fixed-rate personal loan and how much of what you repay is interest. Enter the amount you want to borrow, the annual interest rate a lender quoted, the term and how often you’ll pay, and it shows the payment, the total interest and a year-by-year schedule of how the balance falls.

How the payment is calculated

A personal loan is repaid in equal instalments that cover the interest due for each period plus part of the principal. The calculator divides the annual rate by the number of payments in a year and applies the standard amortization formula, so each payment is the same and the last one clears the balance. Early payments are mostly interest, because the balance is largest at the start; by the final year almost all of each payment goes to principal. Our guide to how loan interest is calculated walks through the formula step by step, including how Canadian compounding rules differ between loan types.

Two inputs drive the result:

• The rate. It depends mostly on your credit history, the lender and whether the loan has collateral. Personal loan lenders compared shows how banks, credit unions and online lenders set their rates, and bad credit loans covers borrowing at the higher end, up to the 35% legal maximum.
• The term. A longer term lowers each payment but adds to the total interest, because the balance stays higher for longer.

Payments on a $10,000 or $20,000 loan over 5 years

Doubling the amount doubles the payment and the interest at every rate, so the $20,000 columns are twice the $10,000 ones, apart from rounding to the cent. The rate matters far more: at the highest rate in the table, the same loan costs several times the interest it does at the lowest. For a different amount or term, or bi-weekly payments, use the calculator above.

Secured or unsecured, fixed or variable

The calculator assumes a fixed rate for the whole term. A loan backed by collateral such as a car, savings or a GIC usually comes with a lower rate than one with none, at the cost of putting that asset at risk; secured loans explains how they work and what happens on default. A variable-rate loan’s payment can change when the lender’s prime rate moves, so the result here is a snapshot at today’s rate.

Using the result

The payment is only part of the picture. Fees such as an origination fee or optional loan insurance raise the true cost, and the loan agreement’s annual percentage rate (APR) should include them; the fee checklist on best personal loans in Canada lists what to look for. If the loan would replace credit card or other high-rate debt, compare the total interest here with what those debts would cost; our guide to debt consolidation works through that comparison.

For revolving borrowing, where you draw and repay as you go, the line of credit calculator works out interest on a line of credit balance instead, and the personal loans and lines of credit guides list the other calculators in this section.

How loan interest works

Two loans with the same quoted rate can cost different amounts, because the cost depends on how the interest is calculated: whether it is charged only on the amount borrowed or also on interest already added, how often it compounds, and how each payment is split between interest and principal. This page explains the methods Canadian lenders use, the compounding rules that differ between loan types, and the payment formula behind an amortized loan, with worked examples. It is part of our personal loans and lines of credit guides.

Simple interest vs compound interest

In the formulas, P is the principal, r the annual rate as a decimal, t the time in years and n the number of compounding periods a year.

The more often interest compounds, the more it costs, though the step from monthly to daily is small. Most instalment loans don’t let interest pile up like this, because each payment covers the interest due first; the compounding frequency still sets the rate applied each period.

Canadian compounding rules by loan type

Federal student loans no longer charge interest, but the provincial part of an integrated student loan may; our guide to paying off student loans covers each province’s rules.

Converting a semi-annual mortgage rate to a monthly rate

Because Canadian fixed-rate mortgages compound twice a year but are usually paid monthly, the lender converts the quoted rate into the equivalent monthly rate:

r_monthly = (1 + r_annual ÷ 2)^1/6 − 1

Step 3 is the same loan expressed as a rate compounded monthly: it is lower than 5% only because it compounds more often, not because the loan is cheaper. The effective annual rate in step 4, the interest actually charged over a full year, is slightly above the quoted 5%. A loan quoted at 5% compounded monthly would have an effective rate higher still, which is why the compounding basis matters when comparing quotes. Our mortgage calculators apply this conversion to mortgage payments and amortization schedules.

How an amortized loan’s payment is calculated

Instalment loans, such as personal loans, car loans and mortgages, use equal payments that cover each period’s interest and repay part of the principal, so the balance reaches zero on the last payment. The payment is:

M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

where M is the payment, P the amount borrowed, r the interest rate per payment period (the annual rate ÷ 12 for monthly payments on a loan compounded monthly) and n the number of payments.

Early payments are mostly interest, because interest is charged on the full balance; as the balance falls, more of each payment goes to principal. The personal loan calculator runs this formula for any amount, rate and term and shows the year-by-year split, and the car loan calculator does the same with sales tax and a trade-in.

Interest-only borrowing: lines of credit

A line of credit charges interest on the balance you carry, and the minimum payment is often only that interest, so the balance doesn’t fall unless you pay more.

The line of credit calculator shows how long a balance takes to clear at different payments. Credit card interest works the same way, but at higher rates and with a minimum payment that barely reduces the balance; how credit card interest works explains the daily calculation and the grace period.

Ways to pay less interest on a loan

Related pages

• Student Loans in Canada
• What Happens If You Can’t Pay Your Student Loan in Canada?