The hidden premium in commercial loans.

The 365/360 method is a common commercial loan interest convention where interest accrues daily on a 365-day year but the rate is applied as if the year has 360 days. This makes the effective annual rate 1.39% higher than the quoted rate. This calculator shows the real cost vs standard amortisation.

A 500,000 loan at 6% quoted over 20 years using 365/360 has an effective rate of 6.083% - meaning over the 20-year term, total payments are roughly 10,000 higher than standard 365/365 would produce. On larger loans or longer terms, the difference is substantial.

Commercial borrowers often don't notice this until they calculate the effective rate. When comparing commercial loan offers, always ask about the interest accrual method - 365/360 adds cost that's easy to miss from the quoted rate alone.

Run it with sensible defaults

Using loan amount of 500,000, quoted annual rate of 6%, loan term of 20, the calculation works out to 3,606.23. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Loan Amount, Quoted Annual Rate, and Loan Term — do not pull with equal force. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

How the math works

Effective rate = quoted rate × (365/360). Apply standard amortisation with effective rate. Compare to standard 365/365 calculation for extra cost. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".

Using this to stay on track

The most common failure mode isn't the plan itself — it's letting the balance creep back up while you're paying it down. Set a rule: no new debt added to the same account until the balance is zero. The calculator is only useful if the number it shows doesn't keep resetting.

What this doesn't capture

Real payoff journeys include missed payments, fee changes, balance transfers, and promotional rates that reset. The calculation assumes a steady plan; reality is rarely that clean. Use the figure as the best-case plan against which actual progress gets measured.