401(k) Loan Repayment Calculator: Payments, Interest, and Payoff
Use this guide to understand the assumptions, inputs, results, and next steps behind the calculator.
Created by Luis Gonzalez · Last updated July 9, 2026
A 401(k) loan repayment schedule shows how much of each payment reduces principal, how much pays interest, and how quickly the balance falls. This calculator estimates those amounts and compares the loan’s interest cost with potential investment growth the borrowed balance might have earned.
The default example uses a $20,000 loan, 5% annual interest, a five-year term, monthly payments, no extra payment, a $100,000 401(k) balance, and a 7% expected return. The calculator estimates a $377.42 monthly payment, $2,645 in total interest, $22,645 total paid, and a payoff date of November 2031. Its estimated opportunity cost is $8,353.
Enter the Loan and Payment Details
Enter the loan principal, annual rate, and repayment term. Choose monthly or biweekly payments. An extra monthly payment is applied to principal in addition to the regular installment; for biweekly schedules, the calculator converts the monthly extra amount to a per-payment amount. Enter your current account balance and expected return for the opportunity-cost estimate.
The 401(k) Loan Calculator compares the loan’s cost with missed growth and fees. For a plan loan default estimate, use the 401(k) Loan Default Penalty Calculator.
Read the Default Payment Schedule
For the default monthly schedule, the periodic interest rate is 5% ÷ 12 = 0.4167%, or 0.004167 as a decimal. The first month’s interest is $20,000 × 0.004167 = about $83.33. Subtracting that interest from the $377.42 payment leaves $377.42 − $83.33 = $294.09 of principal. The remaining balance is $20,000 − $294.09 = $19,705.91.
As the principal falls, the interest portion shrinks. In the final payment, the schedule shows $1.57 of interest and $375.86 of principal, bringing the balance to $0. Across 60 monthly payments, total interest is $2,645, so total paid is $20,000 + $2,645 = $22,645. The displayed payment is rounded to cents, while totals use the calculator’s underlying unrounded values.
The calculator estimates opportunity cost by comparing the initial $20,000 with hypothetical monthly compounding at 7% over 60 months. It reports $8,353 of potential growth. This is not a guaranteed loss: market returns vary, and this calculation does not model the timing of each repayment returning to the account.
Formula: Payment, Interest, and Balance
The fixed-payment formula calculates an installment that fully amortizes the loan over the selected number of periods.
Periodic rate = annual interest rate ÷ payments per year
Regular payment =
loan amount × periodic rate × (1 + periodic rate)^number of payments
÷ [(1 + periodic rate)^number of payments − 1]
For the default case, the periodic rate is 5% ÷ 12 = 0.004167 and the number of payments is 5 × 12 = 60. Substituting these values gives a monthly payment of approximately $377.42.
Interest for a payment period = remaining balance × periodic rate
Principal paid = payment − interest for the period
New balance = old balance − principal paid
For payment one: $20,000 × 0.004167 ≈ $83.33 interest; $377.42 − $83.33 = $294.09 principal; $20,000 − $294.09 = $19,705.91 remaining.
Opportunity cost estimate =
loan amount × [(1 + expected monthly return)^loan months − 1]
Expected monthly return = expected annual return ÷ 12
The calculator uses a 7% ÷ 12 monthly return and 60 months. It reports $8,353, based on its underlying calculation and rounding conventions. Investment growth is uncertain, so treat the result as a comparison rather than a forecast.
Monthly Versus Biweekly Payments
Monthly payments are divided into 12 periods per year; biweekly payments use 26 periods. Biweekly payments can reduce the time to payoff when the payment amount is set appropriately, but the calculator converts an extra monthly amount into a per-pay-period amount rather than simply adding the full extra amount every two weeks.
A change in payment frequency also changes the number and timing of interest calculations. Compare the calculator’s total interest and payoff period rather than assuming biweekly automatically saves a specific amount. Confirm that your plan permits payroll deductions on the chosen schedule.
Extra principal payments can reduce interest by lowering the balance sooner. The effect depends on the plan’s loan terms and whether extra payments are accepted. Test different extra amounts and ensure they do not make you reduce regular retirement contributions or miss the employer match. The 401(k) Paycheck Impact Calculator helps estimate how payroll deductions affect take-home pay.
Compare Repayment Scenarios
Approximate payments below use standard monthly amortization and exclude fees. The examples use different amounts, rates, and terms to show how changing terms affects the payment and interest burden.
| Loan amount | Annual rate | Term | Approximate monthly payment | Approximate total interest |
|---|---|---|---|---|
| $10,000 | 5% | 3 years | $299.71 | $789 |
| $15,000 | 6% | 4 years | $352.27 | $1,909 |
| $25,000 | 7% | 5 years | $495.03 | $4,702 |
A shorter term usually raises the monthly payment while reducing total interest. A longer term usually lowers the required payment but leaves the borrowed balance out of its original investments longer. Choose a payment that fits your cash flow without undermining emergency savings or ongoing contributions.
Tax and Plan Rules to Check
Federal rules generally require repayment within five years, except that a plan may allow a longer period for a loan used to buy a primary residence. Payments generally must be made at least quarterly, and the plan’s terms determine its interest rate, fees, and payroll process. The IRS outlines plan loan limits and repayment rules.
If you leave your employer, the plan may require repayment or apply a plan loan offset. An unpaid balance can create taxable income and possibly an early-distribution penalty. Ask the plan administrator what happens after a job change. The Department of Labor explains how to obtain information about your retirement plan.
Loan payments are not the same as elective salary deferrals. They generally do not count toward the employee contribution limit and do not qualify for an employer match. Keep contributions high enough to receive any match you are entitled to. A 401(k) Contribution Calculator and 401(k) Max Contribution Calculator can help check the contribution side of your plan.
FAQ
Does the interest go back into my 401(k)?
Generally, payments including interest are credited to your plan account. That does not guarantee that your account will match the value it might have reached if the borrowed money had remained invested.
Why is total interest not exactly the payment times 60 minus $20,000?
The payment displayed is rounded to cents, while the schedule and totals are calculated from more precise values. Multiplying the rounded payment by 60 can produce a small difference.
Does paying extra always reduce the loan cost?
An extra principal payment generally reduces the balance faster and can reduce future interest. The exact effect depends on the plan’s payment rules and the timing of the extra amount.
Is biweekly repayment better than monthly repayment?
It depends on the payment amount, interest calculation, and payroll schedule. Compare the calculated payoff period and total interest for both options, then confirm your employer can make the required deductions.
Should I repay the loan faster or keep contributing to my 401(k)?
That is a cash-flow tradeoff. Preserving contributions may be especially valuable when they earn an employer match, while faster repayment can reduce interest and the time your loan balance remains outstanding. Compare both impacts instead of automatically prioritizing one.
Can I use this estimate as the payoff amount from my plan?
No. The calculator estimates a schedule using the inputs you provide. The plan administrator supplies the official payoff amount, which may include different dates, fees, or payment processing rules.
Next Steps
Confirm the loan’s actual rate, fees, and payroll schedule with your plan. Test an extra payment and compare it with maintaining your regular contributions. For the impact of a loan on retirement wealth, try the 401(k) Compound Interest Calculator and 401(k) Future Value Calculator. To compare the projection with other savings targets, use the 401(k) Calculator or retirement calculator.