What a balance costs if nothing ever repays it.
A revolving facility has no schedule, so a balance that is never reduced simply continues. This is what that continuation costs, expressed over years rather than months.
Last reviewed 8 September 2026
Indicative interest cost
Weekly
$215/week
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
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Your $120,000 scenario
$80,000 drawn at 14.00% . Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
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What this tool calculates
The annual interest on a balance that is not being repaid.
The output is the cost of carrying a balance for a year with no principal reduction, which is what a revolving facility does by default. Multiplying that figure by the number of years the balance has actually persisted gives the total paid, and the section below does that for one, three and five years.
Over time
An $80,000 balance, carried.
Illustrative at an indicative 14%, ignoring compounding of any capitalised interest. The point is the total rather than the precision.
| Period | Interest paid | Balance still owing |
|---|---|---|
| One year | ~$11,200 | $80,000 |
| Three years | ~$33,600 | $80,000 |
| Five years | ~$56,000 | $80,000 |
| Ten years | ~$112,000 | $80,000 |
Illustrative on stated assumptions and rounded. Not a quote or offer of credit.
Reading the table
Ten years of interest and the same amount owing.
The last row is the point of this page. A balance carried for a decade on a revolving facility costs more in interest than the amount borrowed, and the amount borrowed is still there at the end of it. Nothing about the facility prevented that, because a facility with no schedule reduces the balance only when the business decides to.
That is not a criticism of the product. It is the direct consequence of the flexibility that makes a revolving facility useful, and it is why a business carrying a persistent balance needs a repayment plan of its own where a term loan would have supplied one.
The practical version is a standing transfer. A fixed amount moved to the facility every week or month, treated as non-negotiable in the way a loan instalment would be, converts a facility with no schedule into one with a schedule the business set itself.
The comparison
What a term facility would have done instead.
The same $80,000 on a five-year term facility at an indicative 11% would cost roughly $24,000 in interest, and at the end of the five years nothing would be owing. Against $56,000 of interest and $80,000 still outstanding, that is a difference of about $112,000 in total position.
The gap comes from two sources in roughly equal measure. Part of it is the rate, because term facilities price below revolving ones. The rest is amortisation, because interest on a reducing balance is far less than interest on a static one.
Where a balance has genuinely become permanent, that comparison is the argument for terming it out. It is also the argument for doing so early, since every year of delay adds a year of the difference.
What the tool does
The arithmetic behind the figures, and what it leaves out.
In revolving mode the calculator applies the annual rate to an average drawn balance and reports the interest cost of carrying that balance. It deliberately does not produce a repayment figure, because a revolving facility has no repayment schedule and a figure implying one would misdescribe the product.
It excludes every fee. Line fees, establishment fees, review and renewal charges, excess fees and any security disbursements are all real and none of them is here, because they vary by lender in ways no formula can anticipate. On a facility held largely undrawn, the line fee is most of the annual cost, so the figure produced here is a floor rather than an estimate.
It also excludes any tax effect and anything specific to a business. It is a way of seeing how the amount drawn and the rate interact before a conversation with a lender, and it is not a quote, an application or an offer of credit. Nothing entered here is transmitted anywhere.
References
Sources
- Reserve Bank of New Zealand, interest rate statistics
Context for why indicative rate bands move over time rather than being fixed figures.
- Commerce Commission
The regulator whose guidance covers fee disclosure and representations about cost.
- Personal Property Securities Register
The register whose search and filing fees appear as disbursements on a secured facility.
- Financial Service Providers Register
Where a New Zealand lender’s registration can be confirmed before an application is made.
- Financial Markets Authority, financial advice
Backs the distinction between general information of this kind and regulated financial advice.
FAQ
Carrying a balance, questions
What does this calculator show?
The annual interest cost of a balance that is not being repaid, which is the default behaviour of a revolving facility. Multiplying by the number of years the balance has persisted gives the total paid.
Why does the balance stay the same?
Because a revolving facility has no repayment schedule. Nothing reduces the balance unless the business chooses to reduce it, which is the flexibility being bought and the risk being taken.
Does interest compound on a revolving facility?
Where the monthly interest charge is debited to the facility rather than paid separately, it becomes part of the balance and accrues interest from the following day. The figures here ignore that, so they understate slightly.
How much would a term facility have cost instead?
Materially less, from two sources: a lower rate and a reducing balance. On $80,000 over five years the difference in total position can approach the amount originally borrowed.
What is the practical remedy?
A standing transfer to the facility, fixed and treated as non-negotiable in the way a loan instalment would be. That converts a facility with no schedule into one with a schedule the business set itself.
When should a balance be termed out instead?
When it has genuinely become permanent, which the lowest balance across a year will show. Terming out the permanent portion lowers the rate, clears the debt on a schedule and restores headroom on the limit.
Are the figures here quotes?
No. Everything on this page is indicative and illustrative, calculated on stated assumptions. Actual rates and terms come from a lender after assessment, and nothing here is an offer of credit.
Is anything entered here transmitted?
No. The calculator runs entirely in the browser, nothing is sent anywhere and no personal details are collected on this site at all.