Crop input loan interest and payoff calculator
Input money usually goes out in pieces (seed in winter, fertilizer in spring, chemicals in June) and comes back in one check after harvest. This calculator charges each draw only for the days it is out, the way most input programs and operating notes do.
Calculate interest to payoff
How the math works
Each draw is charged simple interest from the day it is drawn until the day you pay the loan off:
interest = amount × annual rate × days outstanding ÷ 365
The example above borrows $131,000 in three pieces at 7.5% and pays it all back on November 15. The February seed draw is out for 273 days, so it carries most of the interest. The June chemical draw is out for only 163 days. If you lump all $131,000 at the February date, the interest comes out about $1,160 higher than what you will actually be charged.
The "interest per day" figure is useful in the fall. It tells you what each extra day costs once all the money is out, which is what you weigh against holding grain for a better price. If the line costs $27 a day and you're hoping for another 10¢ on 20,000 bushels, waiting a month costs about $810 in interest to try for $2,000.
Things that change the real number
- Promotional rates. Seed and chemical companies often finance at 0% or a low rate until a set date, then charge a higher rate. Use that date as the draw date for the interest-bearing part.
- Payoff timing. Many programs carry a deadline, often around harvest or the end of the year. Missing it can raise the rate on the whole balance, not just the days after the deadline.
- Variable rates. Operating notes tied to prime move when prime moves. To see the range, run the calculator at today's rate and again a point higher.
- Partial paydowns. If you pay part of the balance from early grain sales, the operating line calculator handles payments as well as draws.
Tracking several of these at once? The free farm bill due-date tracker keeps them in date order.
Comparing two financing offers
When a retailer and your bank both offer to finance the same inputs, enter the same draws twice: once at the retailer's rate and payoff date, once at the bank's. Add each lender's fees to its interest. The cheaper total wins, unless one of them ties you to buying a product you would not otherwise choose. If the retailer is offering a cash discount instead, the prepay vs. finance calculator is the better tool.
Questions people ask
How is interest on a crop input loan calculated?
Most input loans and retailer financing programs charge simple interest: the amount drawn times the annual rate times the number of days it is out, divided by 365 (or 360). Each draw starts its own clock, so money drawn in May costs less than money drawn in February, even at the same rate.
What does a 360-day basis change?
Dividing by 360 instead of 365 makes every day slightly more expensive. On a 7.5% note, a 360-day basis works out to about 7.6% over a full year. Your note or program terms will say which one applies.
My program is 0% until a date and then charges interest. How do I enter that?
Enter the date the 0% period ends as the draw date, since that is when interest starts. If the rate after the promo depends on whether you pay by a deadline, run the calculator twice, once for each payoff date, and compare.
Does this include fees?
No. Origination, loan documentation and program fees aren't interest, but they're part of what the money costs you. Add them to the interest total when you compare offers.
Is the result exact?
It's an estimate. Lenders differ in how they count the first and last day, when a draw is posted, and how they round. The result should come within a few dollars of a simple-interest statement, but your lender's payoff quote is the number that counts.
Related tools
Not financial advice. These calculators give estimates from the numbers you enter. Your lender's terms, fees, day-count method and tax situation can change the result. Check with your lender or advisor before you act. Full disclaimer.