Deferred Payment Loan Calculator
A deferred payment loan lets you postpone repayments for an initial period while interest accumulates on the balance. Enter the loan amount, rate, deferral months and repayment term to see the inflated starting balance, the regular monthly payment, and the full interest cost.
%
months
months
Regular instalment once repayment begins
- 1
Monthly interest rate
6% ÷ 12 = 0.005 - 2
Balance after deferral
20,000 × (1 + 0.005)^12 = 21,233.56Interest capitalises monthly; the balance grows to this inflated amount. - 3
Growth factor
(1 + 0.005)^60 = 1.3489 - 4
Monthly payment
21,233.56 × 0.005 × 1.3489 ÷ (1.3489 − 1) = 410.50
How does this calculator work?
During the deferral period interest capitalises monthly, growing the balance to B = P × (1 + r/12)^d. After deferral, that inflated balance is amortised using the standard instalment formula. Result: a higher monthly payment and more total interest than an equivalent loan with no deferral. Enter loan amount, rate, deferral months and repayment term to see the numbers.
Formula
How this is calculated
During the deferral period no payments are required, but interest continues to compound on the outstanding principal. This calculator assumes monthly capitalisation — each month the balance grows by the monthly rate (r/12), so after d deferral months the new starting balance is B = P × (1 + r/12)^d. This is the standard treatment for student loans during school enrolment, construction-period mortgages, and many consumer credit products. If the rate is zero, the balance is unchanged during deferral.
Once the deferral ends, the accumulated balance is amortised over the chosen repayment term using the standard instalment formula. Because interest has been added to the principal, the monthly payment is higher than it would have been on an equivalent loan without any deferral — and the total interest paid over the life of the loan is larger by exactly the amount capitalised during deferral plus the downstream interest on that amount.
The chart shows the full balance history: a rising curve during the deferral phase (from capitalised interest) followed by a declining curve as regular payments reduce the balance to zero. Always verify with your lender whether they capitalise interest during deferral and at what frequency, as some contracts use simple accrual or annual capitalisation instead.
Frequently asked questions
No — deferral reduces short-term cash outflow but increases the total interest paid, because interest compounds on a growing balance during the deferral period. The longer the deferral and the higher the rate, the greater the additional cost over the life of the loan.
Capitalisation means unpaid interest is added to the loan principal so that future interest is charged on the larger balance. Most lenders capitalise monthly during a deferral or grace period, as this calculator assumes. A few use annual or end-of-deferral capitalisation — check your loan contract.
Common examples include student loans deferred while you are enrolled in school, COVID-era mortgage forbearance, construction-period loans deferred until a property is complete, and some car or personal loans that offer a 90-day payment holiday.
Also known as
TG we-Calculate Editorial Team. (2026). Deferred Payment Loan Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/deferred-payment-loan-calculator
TG we-Calculate Editorial Team. "Deferred Payment Loan Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/deferred-payment-loan-calculator.
TG we-Calculate Editorial Team, "Deferred Payment Loan Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/deferred-payment-loan-calculator
@misc{wecalculate_deferred_payment_loan_calculator, title = {Deferred Payment Loan Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/deferred-payment-loan-calculator}}, year = {2026}, note = {TG we-Calculate} }
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