Estimate the full cost of pausing your loan repayments
Cost Breakdown
Extra cost as % of outstanding balance: 0%
How to Use This Tool
Start by selecting your loan’s currency from the dropdown menu. Enter your current outstanding loan balance, annual interest rate, and remaining loan term (choose months or years from the unit dropdown).
Input the length of your planned repayment holiday in months, then select how often your lender compounds interest on the loan. Add any flat holiday fee your lender charges, if applicable.
Choose your post-holiday adjustment preference: extend your loan term to keep the same monthly repayment, or increase your monthly repayment to keep the original loan term. Click "Calculate Cost" to see your detailed breakdown.
Use the "Reset" button to clear all inputs and start over. Once results are generated, click "Copy Results" to save the breakdown to your clipboard.
Formula and Logic
The calculator uses standard compound interest and loan amortization formulas to estimate holiday costs:
- Holiday Interest Accrued: Calculated using the compound interest formula A = P(1 + r)^n, where P is your outstanding balance, r is the periodic interest rate (based on compounding frequency), and n is the number of compounding periods during the holiday.
- Total Capitalized Amount: Sum of holiday interest accrued and any flat holiday fee, added to your outstanding balance after the holiday.
- Original Monthly Repayment: Calculated using the PMT formula for loan amortization, based on your outstanding balance, remaining term, and interest rate.
- Post-Holiday Adjustments: If you extend your term, the calculator uses the NPER formula to find the new term length that keeps your monthly repayment unchanged. If you increase repayment, it uses the PMT formula to find the new monthly amount that fits your original remaining term (minus holiday months).
Practical Notes
Repayment holidays are not free pauses: interest almost always accrues during the break, increasing your total loan cost. Check your loan agreement for compounding frequency, as daily compounding will result in higher interest accrual than annual compounding.
Some lenders charge flat fees for repayment holidays, which may not be advertised upfront. Always confirm fee structures with your lender before applying for a holiday.
Extending your loan term will lower your monthly repayment but increase the total interest you pay over the life of the loan. Increasing your repayment keeps the term the same but raises your monthly budget requirement.
Repayment holidays can affect your credit score if not agreed with your lender in advance. Only take a holiday through official lender channels to avoid missed payment marks on your credit report.
Why This Tool Is Useful
Many borrowers underestimate the long-term cost of repayment holidays, focusing only on short-term cash flow relief. This tool quantifies both immediate and long-term costs, helping you weigh the tradeoff between temporary budget flexibility and total loan expense.
Financial planners can use this tool to model different holiday scenarios for clients, comparing term extension vs repayment increases to align with long-term financial goals.
It eliminates guesswork by accounting for compounding frequency and lender fees, two factors often overlooked in manual calculations.
Frequently Asked Questions
Will a repayment holiday affect my credit score?
A repayment holiday arranged officially with your lender will not count as a missed payment, so it will not directly hurt your credit score. However, the increased loan balance and potential term extension may affect your debt-to-income ratio, which lenders check for future credit applications.
Is interest always charged during a repayment holiday?
In most personal loans, mortgages, and student loans, interest accrues daily or monthly during a repayment holiday. Only a small number of subsidized loans (such as some federal student loans) waive interest during approved breaks. Always confirm with your lender.
Can I take multiple repayment holidays on the same loan?
Most lenders limit repayment holidays to 1-2 per loan term, with a maximum total break of 12-24 months. Taking multiple holidays will compound interest accrual each time, significantly increasing your total loan cost.
Additional Guidance
Before taking a repayment holiday, check if you qualify for other relief options such as temporary interest rate reductions or payment deferrals that do not accrue interest. These may be more cost-effective for short-term cash flow issues.
If you choose to extend your term, consider making extra repayments once your budget recovers to reduce the additional interest cost. Most lenders allow fee-free extra repayments on standard loans.
Keep records of all holiday agreements in writing, including fee amounts, interest accrual terms, and term adjustment details. This prevents disputes with lenders over unexpected balance increases.