Premium finance calculator
Shows what financing a commercial premium costs: the payment, the total finance charge and the effective annual rate, compared with paying the premium in full.
Runs entirely in your browser: nothing you enter is sent or stored by this site. Results are estimates for planning, not a quote or advice.
Most commercial buyers do not pay a full year's premium on day one. A premium finance company can pay the insurer and bill you in installments, or the insurer can offer its own plan. This tool turns the terms of either into a monthly payment, a total cost and an effective annual rate. The terms it opens with are examples. Use the ones in your agreement.
How to use it
- Total premium, including taxes and fees. The full amount on the quote or invoice.
- Down payment. A percentage of the premium due at signing. The finance agreement or insurer's plan sets the minimum.
- How the charge is stated. Pick the one your paperwork uses: an annual percentage rate (a premium finance agreement), a flat finance charge in dollars, or an insurer installment plan that adds a fee to each payment.
- The rate, charge or fee. Enter the matching figure.
- Set-up fee at signing, if any, and the number of monthly installments.
The math
The down payment is the premium times the percentage. The amount financed is the premium minus the down payment.
- APR: the level payment is the amount financed × r ÷ (1 − (1 + r)^−n), where r is the APR ÷ 12 and n is the number of payments. The finance charge is the payments added up, minus the amount financed.
- Flat charge: payment = (amount financed + charge) ÷ n.
- Insurer plan: payment = amount financed ÷ n + the fee. The charge is the fee times n.
The effective annual rate is the monthly rate at which the payments are worth the amount financed (less any set-up fee), times 12. It assumes the first payment comes one month after signing.
A hypothetical example with the opening numbers: a $24,000 premium, 25% down ($6,000) and $18,000 financed over 9 months.
| Terms | Payment | Finance charge | Effective rate |
|---|---|---|---|
| 9% APR | $2,075.75 | $681.72 | 9.00% |
| $900 flat charge | $2,100.00 | $900.00 | about 11.8% |
| $10 per installment | $2,010.00 | $90.00 | about 1.2% |
The labels do not tell you the cost. The flat charge looks cheap and costs more than the APR loan. Comparing the same dollars is the point.
Assumptions and limits
- The effective rate is the monthly rate times 12. It is a quick way to compare offers and not the figure your finance agreement discloses. Use the agreement's own.
- Late fees, returned-payment fees, cancellation charges and state limits on finance charges and fees are not modeled. Those rules vary by state.
- A premium subject to audit can change during or after the term. The tool treats the premium as fixed.
- If a payment is missed, a premium finance company can have the policy cancelled under the power of attorney in the agreement and collect the unearned premium. A lapse can leave you uninsured. Check policy cancellation and nonrenewal: notice periods and your rights for notice rules.
- The insurer's own installment plan often costs less than outside financing. Ask for both before you sign.
- Paying in full may earn a better price from some insurers. The tool compares only financing costs.
Read paying commercial premiums: installments and premium financing for how agreements are structured, premium audits: how they work and how to prepare for why final premium can differ, and how to budget for business insurance for cash-flow planning. The glossary entry premium finance defines the term.
Last reviewed October 10, 2026