Monthly Personal Interest Expense & Debt Servicing Cost Calculator

Interest rates are down. Balloon debt is down. You’re thinking about getting rid of your car payments. Maybe you’re thinking about refinancing. If so, you probably want to know how much it will cost you to get out of debt and stay out of debt. The good news is that calculating the cost of debt is easy. You just need to know your interest rate, the amount of debt you have, the length of your plan, and the number of years you choose to repay your debt.

A new year is always a great time to start thinking about the future, and planning for it. One of the things that can easily be overlooked is planning for interest and payments on one’s debts. It’s very easy to forget that these things will have to be paid off at some point, and that those payments will happen on a certain date. A very useful tool to help you keep track of this is a Debt Servicing Calculator. Sure, it’s not quite as fun to look at as a calculator with a roller ball, but a Debt Servicing Calculator is a much more convenient way to handle this.

Home » Bookkeeping » Monthly Personal Interest Expense & Debt Servicing Cost Calculator

Jul 31, 2020
Bookkeeping by Adam Hill

Also not included in interest expense is any payment made toward the principal balance on the debt. For example, if a company paid $1 million to its creditors, but $200,000 went toward the principal, the interest expense is $800,000. Interest expense represents the cost of money you’ve borrowed on loans and lines of credit.

How Interest Expenses Work

Your first stop is to check out Small Business Administration or SBA loans, which are partially guaranteed by the government. These small business-friendly loans have long repayment terms and interest rates starting around 5.75 percent. They’re a good option for profitable small businesses that have a solid two-year trading record – find a lender on the SBA website. If you’re not eligible for an SBA loan, then various banks could also offer low-interest rates; it may be worth hiring a broker to help you figure out your options. To figure the interest expense for each payment period, multiple the periodic interest rate by your average balance.

It represents interest payable on any borrowings – bonds, loans, convertible debt or lines of credit. It is essentially calculated as the interest rate times the outstanding principal amount of the debt. Interest expense on the income statement represents interest accrued during the period covered by the financial statements, and not the amount of interest paid over that period. While interest expense is tax-deductible for companies, in an individual’s case, it depends on his or her jurisdiction and also on the loan’s purpose.{“@context”:”https://schema.org”,”@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”Is interest expense an expense?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” Interest expense is a deduction from gross income.”}},{“@type”:”Question”,”name”:”Is interest expense a debit or credit?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” Interest expense is a credit.”}},{“@type”:”Question”,”name”:”How do you figure out interest expense?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:” Interest expense is the amount of interest paid on a loan.”}}]}

Frequently Asked Questions

Is interest expense an expense?

Interest expense is a deduction from gross income.

Is interest expense a debit or credit?

Interest expense is a credit.

How do you figure out interest expense?

Interest expense is the amount of interest paid on a loan.