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Loan Payment Calculator for Canada

Calculate your loan or promissory note payment schedule. Enter the principal, interest rate, term, and payment frequency to see your periodic payment amount and total interest.

Your details

The total amount of money borrowed.

The yearly interest rate as a percentage (e.g., 5.5%).

The total duration of the loan.

The unit of time for the loan term.

How often payments are made.

The date the first payment is due. Used to generate the payment schedule.

Result

Periodic Payment Amount -CA$489.15

The amount you pay each period (principal + interest).

How it is calculated

Total Number of Payments The total number of payments over the life of the loan.
60
Periodic Interest Rate The interest rate applied to each payment period.
0.01 %
Total Amount Paid The sum of all payments over the loan term.
-CA$29,349.00
Total Interest Paid The total cost of borrowing the principal.
-CA$54,349.00
Next Payment Date (Example) An example of the date for the second payment, based on your first payment date and frequency.
15 December 2026
Keep in mind
  • This calculator assumes a standard amortizing loan with equal periodic payments (principal and interest). It does not account for fees, insurance, or potential changes in interest rates for variable-rate loans.
  • For shareholder loans, the Canada Revenue Agency (CRA) sets a prescribed interest rate for tax purposes. If interest charged is below this rate, the difference may be a taxable benefit. The rate used here (5% for Q4 2026) is an example; the actual rate changes quarterly. Please verify the current rate with the CRA.
  • The 'Next Payment Date (Example)' is for illustrative purposes only. A full amortization schedule would list all payment dates and balances.
  • If the loan term is entered in months, the total number of payments equals that number of months, regardless of payment frequency. Ensure your term unit matches your intended schedule.

Indicative result, calculated from the details and the rules listed below. It does not replace an official calculation or advice from a professional.

Prepare the document now

With the result already worked out, you can fill in the document right away.

The editor opens with the calculator details already entered.

Loan Agreement
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Loan Payment Calculator for Canada

This calculator helps you determine the periodic payment amount for a loan or promissory note in Canada. Whether you're borrowing for a car, a personal expense, or formalizing a loan between parties, understanding your payment schedule is crucial for budgeting and legal clarity. A clear agreement protects both the lender and the borrower by defining the exact repayment obligations.

How Loan Payments Are Calculated

The standard calculation for a fixed-rate, amortizing loan uses the principal amount, the annual interest rate (APR), the loan term, and the payment frequency. The formula determines a fixed payment amount that pays off both interest and principal over the term, with the interest portion being higher at the beginning of the loan. This process is called amortization.

The key steps in our calculator are:

  • Determine Payments per Year: Based on your selected frequency: 12 for monthly, 26 for bi-weekly, and 4 for quarterly.
  • Find Total Number of Payments: If the term is in years, it's multiplied by the payments per year. If the term is already in months, that number is used directly as the total payments.
  • Find Periodic Interest Rate: The annual rate is divided by 100 to convert it to a decimal, then divided by the number of payments per year.
  • Calculate Payment: The standard PMT (payment) formula is applied using the principal, periodic interest rate, and total number of payments. If the interest rate is zero, the payment is simply the principal divided by the number of payments.
The result is your fixed periodic payment amount.

A Detailed Worked Example

Let's walk through a detailed example of a $25,000 car loan at a 6.5% annual interest rate, to be repaid with monthly payments over 5 years, with the first payment due on November 15, 2026.

  • Principal: $25,000
  • Annual Interest Rate: 6.5%
  • Loan Term: 5 years
  • Term Unit: Years
  • Payment Frequency: Monthly
  • First Payment Date: 2026-11-15
First, the calculator determines there are 12 payments per year. The total number of payments is 5 years * 12 = 60 payments. The periodic (monthly) interest rate is 6.5% / 100 / 12 = 0.0054167 (or about 0.54167%). Applying the PMT formula with these values yields a monthly payment of approximately $489.15. Over the 60 payments, you would pay a total of $29,349.00, which includes $4,349.00 in interest. The example next payment date would be December 15, 2026.

Common Loan Types and Frequencies in Canada

Monthly Payments: The most common schedule for mortgages, car loans, and personal loans. It aligns with most income cycles and is easy to budget for.

Bi-Weekly Payments: Payments are made every two weeks. This results in 26 payments per year, which is equivalent to 13 monthly payments. This accelerated schedule helps pay off the loan faster and significantly reduces the total interest paid over the life of the loan compared to a standard monthly schedule.

Quarterly Payments: Often used for informal business loans, shareholder loans, or investments. This frequency aligns with financial reporting quarters (Q1, Q2, Q3, Q4). For shareholder loans, it's important to be aware of the CRA's prescribed interest rate, as charging a rate below it can have tax implications for the borrower.

Important Considerations and Limitations

This calculator provides an estimate for standard, fixed-payment, amortizing loans. It does not account for:

  • Variable interest rates, which can change over time.
  • Any upfront or ongoing fees (e.g., origination fees, annual fees).
  • Loan insurance premiums.
  • Interest-only payment periods or balloon payments.
  • Prepayment options or penalties.
For mortgages, especially those with variable rates or complex features, a specialized mortgage calculator or your lender's tools will provide a more accurate figure.

After Calculating: Prepare Your Legal Document

Once you have calculated your payment terms, the next crucial step is to formalize the agreement with a proper legal document. This ensures all terms—including the payment schedule, interest rate, and consequences of default—are clearly defined and legally enforceable.

For a standard loan between individuals, a business, or from an individual to a business, a Loan Agreement is the most comprehensive and recommended choice. It details all obligations and protections for both parties.

For a simpler, unilateral promise to pay, such as a personal IOU or a straightforward debt acknowledgment, a Promissory Note may be sufficient. It is a binding promise from the borrower to the lender.

If the loan is between a corporation and one of its shareholders (in either direction), a Shareholder Loan Agreement is necessary. This addresses specific corporate law requirements and the critical tax implications set by the Canada Revenue Agency.

Using this calculator's results, you can pre-fill key fields in these document templates, making the drafting process quicker and ensuring the numerical terms in your contract match your calculations.

Frequently asked questions

What is the difference between a loan agreement and a promissory note?

A loan agreement is a comprehensive contract between a lender and a borrower detailing all terms, conditions, representations, and covenants. A promissory note is a simpler, unilateral document where the borrower promises to repay a specific sum under agreed terms; it is often used for simpler, more straightforward transactions.

Why is the CRA prescribed interest rate important for shareholder loans?

For shareholder loans in Canada, if the interest rate charged is below the CRA's quarterly prescribed rate, the difference may be considered a taxable benefit to the borrower (or shareholder) and must be reported as income. It is crucial to verify the current prescribed rate with the CRA when setting the loan terms.

Can I use this calculator for a mortgage?

This calculator provides a good estimate for the payment amount of a fixed-rate, amortizing mortgage. However, mortgages often have more complex features like variable rates, prepayment options, and mortgage default insurance. Use this for initial estimates, but consult your mortgage agreement or a specialized mortgage calculator for precise figures.

How does a bi-weekly payment save me money compared to monthly?

Bi-weekly payments (every two weeks) result in 26 payments per year, which is equivalent to 13 monthly payments. This extra payment each year goes directly toward reducing your principal balance faster than with monthly payments. This reduces the principal on which interest is calculated sooner, thereby lowering the total interest paid over the life of the loan.

What if my loan has an interest-only period or a balloon payment?

This calculator is designed for fully amortizing loans where each payment includes both principal and interest. It does not calculate payments for interest-only periods or final balloon payments. For such loans, you would need to calculate the interest payment separately during the interest-only period and plan for the large principal payment at the end.

Is the calculated payment amount legally binding?

No. This calculator provides an estimate for informational and planning purposes only. The legally binding payment amount is the one explicitly specified in your signed and executed loan agreement or promissory note. Always ensure the final document reflects the agreed-upon terms.

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