Family Loan Repayment Calculator

How it works

Borrowing from family can save you a fortune in interest, but the repayment is just as real as any bank loan, and treating it that way is what keeps the relationship easy. This calculator turns the amount you borrowed, the rate you agreed to, and your term into one level monthly payment that clears the balance exactly on schedule, using standard amortization:

• P — the loan amount
• i — the monthly interest rate (annual rate ÷ 12)
• n — the number of monthly payments
• M — the level monthly payment

With the defaults, $10,000 at 3% over 48 months works out to about $221 a month. Over the full term that is $10,624 repaid, of which $624 is interest. If your relative asked for a small rate, it is usually because the IRS expects larger family loans to carry at least the Applicable Federal Rate.

Paying a documented 3% keeps their taxes tidy and still costs you a fraction of what a bank would charge.

✓ Every result is checked against independent reference math. See how we test the calculators →

A worked example: a $10,000 family loan at 3%

Your sister floats you $10,000 to cover a move, and you agree on a gentle 3% rate over 48 months so it stays fair to you both. That works out to $221 a month, paid off by July 2030.

Over the full term you hand back $10,624 in total, which means the interest comes to just $624 across four years. Keeping it in the family with a low rate is what holds that interest down, compared with what a card or personal loan would tack on.

Forty-eight steady payments of $221 is the whole plan, no surprises at the end. Enter your own loan amount, rate, and term to see the monthly figure and total interest for your arrangement.

Repaying a family loan the right way

• Get it in writing. A short signed note with the amount, rate, term, and payment protects you as much as your lender: you know exactly what you owe, when you will be done, and no one has to rely on memory.
• Honor the agreed rate. If your relative set the rate at or above the IRS Applicable Federal Rate, that is not stinginess. It is what keeps a larger loan from being taxed as a gift, and it still leaves you paying far less than any bank.
• Ask about missed payments before you need to. Find out now whether a skipped month pauses the schedule or keeps accruing, and get the answer into the note. Knowing the rule in advance spares you the hardest conversation later.

Interest, taxes, and the AFR

If you are paying interest on money borrowed from family, it helps to understand where the rate came from. The reference point is the Applicable Federal Rate, or AFR, a low minimum the IRS publishes every month for short, medium, and long-term private loans.

• Why your lender cares about the AFR. On a larger loan, if they let you borrow below the AFR, the IRS can treat the interest they skipped as if they had collected it anyway, known as imputed interest, and potentially as a gift to you. A rate at or above the AFR spares them that mess, so do not take a small rate personally.
• Small loans get a pass. Very small family loans generally fall under de minimis thresholds where these rules do not bite, so an informal arrangement is usually fine for modest amounts.
• What it means for your side. Interest on a personal family loan is generally not deductible for you, so the number to watch is the total interest line in the results. That figure is the full cost of the favor, and at 3% it stays tiny next to what a card or personal loan would take.

None of this is tax advice, and the AFR moves month to month. If the rate on your loan seems oddly specific, that is probably where it came from, and it is a sign your lender did their homework.

A worked example

Say you borrow $5,000 from a parent at 3% over 24 months. The calculator returns a level payment of about $215 a month. Over the two years you repay roughly $5,161, of which only about $161 is interest, a rounding error next to what a card or personal loan would have charged you on the same balance.

The schedule reads like any amortized loan: early payments carry a slightly larger interest slice, and as the balance falls, more of each payment goes to principal until it clears on the final month. If $215 is more than your budget can hold, stretch the same loan to 48 months and the payment drops to around $111, at the cost of a little more total interest, since the balance is outstanding longer. If you can manage 12 months, the payment rises while the interest shrinks toward nothing.

Run these variations before you sign the note, because the goal is a payment you will actually make every month. A schedule you quietly fall behind on is what turns a favor sour.

Keeping the loan from straining the relationship

Owing money to family carries a weight a bank loan never does: the lender sits across from you at dinner. A little structure on your side of the arrangement is what keeps the debt from following you into every conversation.

• Automate the payment. Set up a standing transfer for the day after your paycheck lands. Your relative should never have to ask where this month's payment is, because the asking is what erodes the relationship, not the money.
• Speak up early if you are struggling. A missed payment with no explanation reads as avoidance. A call two weeks ahead, proposing a pause or a smaller amount for a stretch, reads as respect. A lender who is family will almost always work with you if you come to them first.
• Keep your own record. Log every payment you make, even though nobody is sending statements. If memories ever differ about what has been paid, a simple dated list settles it in seconds.

Repaid on schedule, a family loan is the cheapest money you will ever borrow and quiet proof that the trust was well placed. Repaid vaguely, it becomes the thing nobody wants to bring up at dinner.