Interest-Free Loan Calculator

An interest-free loan is exactly what it sounds like: a loan where the borrower repays the principal in full, with no interest charge. The classical Islamic-finance form is Qard Hasan (a benevolent loan), commonly extended between family members, friends, charitable institutions, and some employers; the same mechanics apply to any zero-interest arrangement, including 0% promotional credit-card offers during their introductory period and intra-company employee loans. The legal contract is real, repayment is enforceable if documented, and the only thing missing from a conventional loan is the profit/interest element.

How to use it

Enter the loan amount and the repayment term in months. The calculator returns the monthly payment, the total repaid (which equals the loan amount, by definition), and the total interest (zero, by definition). Adjust either input and the figures recalculate instantly. The currency selector at the top of the calculator changes formatting throughout — the math itself is currency-neutral.

Worked example

A 10,000 loan repaid over 24 months at zero interest gives a monthly payment of 10,000 ÷ 24 = 416.67 per month (currency follows the selector). Total repaid is 10,000 — the same as the loan amount, since no interest is charged. The two inputs the math depends on are the principal and the term; everything else is implied by zero interest.

How the math works

Monthly payment = loan amount ÷ term in months. Total repaid = monthly payment × term = loan amount. Total interest = 0. The simplicity is the point: with no rate or compounding to model, the calculation is a one-line division. The formula box below shows the same expression in standard notation.

Where these arrangements come up in practice

The most common contexts are: family or friend loans (where charging interest would feel inappropriate to the lender or change the relationship); Qard Hasan in Islamic-finance markets (a benevolent loan structured to comply with the prohibition on riba); 0% promotional periods on credit cards or store finance (interest-free during a defined window, then reverting to standard rate); employer-extended loans for season tickets, training costs, or hardship support. The contract is legally real even when there is no interest, and most jurisdictions enforce written zero-interest loans the same way as interest-bearing ones.

What changes when interest is added back in

The same loan amount over the same term, but at a non-zero rate, costs the borrower more — by an amount that depends on the rate and the schedule. As an orientation, an interest-bearing loan with the same principal and term will always have a higher total repaid than the zero-interest equivalent; the gap widens with the rate and with the term. The Loan Affordability Calculator and Personal Loan calculators on this site can be used to run the same principal and term at any non-zero rate and compare the total cost.

What this calculator doesn't capture

The model assumes the loan is genuinely interest-free for the entire term, that all payments are made in full and on time, and that there are no fees. Real-world arrangements sometimes include arrangement fees, late-payment charges, or revert to a standard interest rate after a promotional period — these aren't modelled here and would change the effective cost. Read the loan terms for any specific zero-interest product to see what conditions apply.