A deferred business loan
$10,000 borrowed today at 6% compounded annually for 5 years is owed as $13,382.26 at maturity — no payments due before then.
Deferred payment & zero-coupon loan calculator
This is an estimate for information only. It is not financial advice and does not replace the terms disclosed by a lender.
Result
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How it works
Unlike a mortgage or a personal loan, there are no instalments. The lender advances a sum today and is repaid once, at maturity, for the original sum plus every period of compounded interest — this is exactly how a zero-coupon bond is priced, just read in the other direction.
Choose which side you know: the amount borrowed today (to find the maturity payoff) or the amount due at maturity (to find what that payoff is worth today, i.e. its purchase price).
Formulas used
Value at maturity
FV = PV × (1 + i)^n
- PV
- today's value
- i
- rate per compounding period
- n
- number of compounding periods
Worked examples
Pricing a zero-coupon note
A note paying $20,000 in 3 years, discounted at 5% compounded quarterly, is worth $17,230.17 today.
Assumptions and limits
- No payments, fees or penalties occur before maturity.
- The interest rate stays constant for the whole term.
- Compounding follows the frequency you select, evenly across the term.
Frequently asked questions
What is a deferred payment loan?
A loan where the borrower makes no payments during the term; the principal and all accrued interest are due in a single payment at maturity.
How is a zero-coupon bond priced?
It is sold today for less than its face value; the discount is the compounded interest an investor earns by holding it to maturity, which is exactly the "from maturity" mode above.
Why does compounding frequency matter?
More frequent compounding applies interest to already-accrued interest more often, so monthly compounding produces a slightly higher payoff than annual compounding at the same stated rate.
Can I use this for a balloon loan?
Only if there are truly no interim payments. A loan with reduced payments plus a final balloon needs an amortization tool such as the loan calculator, not this one.
Updated
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