How to calculate interest on a line of credit?
This calculator will help you calculate interest on your line of credit. For calculating the payment on your line of credit you will need to multiple the daily interest rate by the balance on your line of credit. You will need to divide your APR by 365 to calculate your daily interest rate.
What is a line of credit and how does it work?
A line of credit provides you, the borrower with access to funds that can be used for a variety of purposes. A line of credit provides a lot of flexibility to the borrower. You are able to borrow up to your approved limit. While there is a balance outstanding or loaned amount on your line of credit you will be required to make interest payments. Many line of credits will also ask for a minimum payment to be made.
In Canada the interest rate that you will pay on a line of credit is typically based on the prime rate in Canada plus a mark up. This means that the interest rate is subject to change or fluctuate. If you have a larger balance borrowed against your line of credit, a change in the interest rate can impact your payment substantially. The rate that you are able to secure on a line of credit is impacted by your credit score, as well as if the line of credit is secured (such as a home equity line of credit) or unsecured in addition to other factors.