Premium Finance Calculator

When an annual insurance premium is six figures or more, lump-sum cash flow can hurt. Premium finance companies front the premium and take monthly payments at 9-12% APR. This calculator sizes the down, monthly payment, interest cost, and all-in price.

Annual premium

Down payment %

Premium finance APR

Months financed

Setup fee

Monthly payment

$3,335

Down payment

$7,200

Financed balance

$28,800

Total interest cost

$1,213

Setup fee

$360

All-in cost (premium + interest + fees)

$37,573

How the math works

Premium financing spreads a large annual insurance premium across the policy year — typically 20% down + 9 months financed at 9-12% APR. Useful for commercial properties with 6-figure premiums where lump-sum cash flow is impractical. Common on large real estate portfolios.

Interest on premium finance is typically deductible as an ordinary business expense. Compare to financing from your general line of credit — sometimes general LOC is cheaper than specialized premium finance.

How to Use

Enter annual premium and down payment percentage.
Enter financing APR and months financed (typical 9).
Enter setup fee percentage.
Read monthly payment and all-in cost.

Frequently Asked Questions

When is it worth it?

Premium financing typically makes sense when your cost of capital is lower than the finance APR, or when you'd rather preserve cash for other uses. Large commercial landlords use it routinely for liquidity management.

Cheaper alternatives?

Line of credit (LOC) often 2-4% cheaper than dedicated premium finance. But LOC consumes borrowing capacity you may need elsewhere. Pay-in-full with 5-10% discount (some carriers offer) is cheaper if you can fund it.

Risks?

If you miss payments, finance company may cancel insurance — leaving the property uninsured. Some carriers allow reinstatement; others don't. Don't let premium finance lapse — always set up auto-pay.