Deferred Payment Loan Calculator
Print| Accrued Interest During Deferment | $0.00 |
Understand the true cost of pausing your loan payments. Use this Deferred Payment Loan Calculator to calculate interest accrual during deferment or grace periods, evaluate capitalized interest costs added to your loan principal, and compute your new post-deferment monthly payments.
The Formula for Loan Deferment & Interest Capitalization
Calculating total debt and post-deferment payments depends on whether your deferred loan is subsidized (interest paid by government/lender) or unsubsidized (interest accrues and capitalizes):
Accrued Deferment Interest = Principal × (Annual APR / 365) × Days Deferred
Capitalized Principal at Repayment = Original Principal + Accrued Deferment Interest
Post-Deferment Monthly Payment = Capitalized Principal × [r(1 + r)^n] / [(1 + r)^n - 1]
Where:
- Subsidized Loan: Accrued interest is zero ($0) during qualified deferment; loan principal remains unchanged.
- Unsubsidized Loan: Interest continues to accrue daily during deferment and is capitalized (added to principal balance) when repayment resumes.
- r: Monthly interest rate decimal (Annual APR / 12).
- n: Remaining repayment term in months after deferment ends.
Unsubsidized Loan Deferment Cost Matrix
Refer to the lookup table below for a sample $30,000 unsubsidized student or commercial loan at 6.8% APR across common deferment durations (assuming a 10-year repayment term post-deferment):
| Deferment Duration | Accrued Deferment Interest | New Capitalized Loan Principal | New Monthly Payment (10 Yrs) | Increase in Total Loan Cost |
|---|---|---|---|---|
| 0 Months (No Deferment) | $0 | $30,000 | $345 / month | Baseline Standard Cost |
| 6 Months Deferment | $1,020 | $31,020 | $357 / month | +$1,420 extra cost |
| 12 Months Deferment | $2,040 | $32,040 | $369 / month | +$2,840 extra cost |
| 24 Months Deferment | $4,080 | $34,080 | $392 / month | +$5,640 extra cost |
Step-by-Step Deferment Calculation Example
Suppose you defer an unsubsidized $20,000 loan at 7.5% APR for 12 months before entering a 5-year (60 month) repayment schedule:
- Calculate Daily Interest Accrual: $20,000 × (0.075 / 365) = $4.11 per day.
- Calculate 12-Month Accrued Deferment Interest: $4.11 × 365 days = $1,500 accrued interest.
- Capitalize Interest into New Loan Principal: $20,000 original principal + $1,500 interest = $21,500 new loan balance.
- Calculate Post-Deferment Monthly Payment: $21,500 amortized over 60 months at 7.5% APR = $430.70 per month (up from $400.76/mo without deferment).
- Calculate Total Deferment Cost Penalty: ($430.70 × 60) – ($400.76 × 60) = $1,796.40 extra lifetime cost.
Frequently Asked Questions
What is interest capitalization on a deferred loan?
Interest capitalization occurs when unpaid accrued interest is added to your loan’s principal balance at the end of a deferment or forbearance period. Future interest is then calculated on the new higher balance.
How can I prevent interest capitalization during deferment?
You can prevent interest capitalization by paying off the interest as it accrues each month during deferment, keeping your principal balance at its original level when full repayment resumes.
What is the difference between loan deferment and forbearance?
In deferment, interest may be paid by the government if you have subsidized federal student loans. In forbearance, interest always accrues on all loan types regardless of subsidy status.
Does loan deferment hurt your credit score?
No, placing a loan into official approved deferment or forbearance does not hurt your credit score, as your account is reported to credit bureaus as current with $0 due.