Credit Builder Loan Calculator
See the monthly payment and true cost of a credit-builder loan — where the money is released only after you pay.
How it works
Payment = P·r ÷ (1 − (1+r)^−n), r = APR ÷ 12, n = months · Interest = payment × n − amount · Cost to build credit = interest + fee
A credit-builder loan works in reverse: the lender locks the loan amount in a savings account, you make fixed monthly payments that are reported to the credit bureaus, and you receive the money only after the final payment. Because the funds are held as collateral, the lender’s risk is low, so the real price of the product is just the interest plus any admin fee — the cost of establishing a payment history. This tool separates the money you get back from that true cost.
Worked example
A $1,000 credit-builder loan at 12% over 12 months has a payment of about $88.85, so you pay $1,066.19 in total and get the $1,000 back at the end. With a $15 admin fee, building credit costs about $81.19 over the year — roughly $6.77 a month.
Frequently asked questions
How does a credit-builder loan work?
The lender puts the loan amount into a locked savings account. You make monthly payments that are reported to the credit bureaus, and once you have paid in full you receive the funds. It builds a payment history without the lender taking much risk.
What does a credit-builder loan actually cost?
Only the interest plus any setup fee — you get the principal back at the end. This calculator shows that net cost, which is the price of the payment history you are building.
Will it really raise my credit score?
It can, because on-time payments and a longer credit history both help. The key is paying every installment on time; a single missed payment reported to the bureaus can undo the benefit.
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Educational estimate, not financial advice. Actual loan terms, fees and taxes vary by lender.