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Margin Loan Calculator

Assess your buying power, interest costs, and final returns using margin

Evaluate Leverage Impacts

Calculate potential gains and losses when borrowing to invest

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What this calculator does

A margin loan is a loan from your brokerage that allows you to borrow money to purchase additional securities using your existing investments as collateral. This leverages your buying power, enabling you to invest more than your available cash balance. However, margin loans come with interest costs, maintenance requirements, and the risk of margin calls if your collateral value drops significantly. Margin trading amplifies both gains and losses, making it suitable only for experienced investors who understand the risks. Brokerages set minimum margin requirements (typically 25-50%) and may liquidate positions if your account falls below these levels. It's essential to carefully calculate borrowing costs and potential outcomes before using margin.

How it works

When you borrow on margin, your broker lends you money against your securities, charging daily interest on the borrowed amount. The broker retains a claim on your investments as collateral. Your account must maintain a minimum equity percentage set by your broker and regulatory requirements. If your account value drops and equity falls below the minimum, you'll receive a margin call requiring you to deposit cash or securities to restore the required margin level. Interest accrues daily and is typically deducted from your account monthly. The interest rate depends on your broker's rates and the amount borrowed.

Formula

Interest Cost = (Borrowed Amount × Annual Interest Rate) / 365 × Days Held. Maintenance Requirement = Account Value × Minimum Margin Percentage. Excess Margin = (Account Value - Borrowed Amount) / Account Value × 100%

Tips for using this calculator

  • Monitor daily margin requirements; brokers can change rates and requirements without notice
  • Calculate interest costs upfront—margin interest compounds and can eliminate profits quickly
  • Understand your broker's margin call policy and have a plan to meet requirements promptly
  • Never borrow more than you can afford to repay quickly, especially in volatile markets
  • Consider using margin only for short-term opportunities, not long-term portfolio building

Frequently asked questions

What happens if my account falls below the minimum margin requirement?

Your broker will issue a margin call, requiring you to deposit funds or securities to restore the required margin level. If you don't comply within the specified timeframe (usually 2-5 business days), your broker can forcibly liquidate positions to meet the requirement, potentially locking in losses.

How is margin interest calculated and when is it charged?

Margin interest accrues daily based on your borrowed amount and the broker's interest rate, typically calculated as (Borrowed Amount × Daily Rate). Interest is usually charged monthly or quarterly, though daily accrual applies. Different brokers offer tiered rates—larger balances may qualify for lower rates.

What's the difference between initial margin and maintenance margin?

Initial margin is the percentage of a purchase you must pay upfront (typically 50%), while maintenance margin is the minimum equity percentage you must maintain (typically 25-30%). You can borrow up to the initial margin requirement, but your account must stay above the maintenance requirement or face a margin call.