When you use M1 Borrow, interest will accrue for each day that you utilize your portfolio line of credit and you are billed on a monthly cadence.

Your bill will be available at the end of each month, and you will only need to pay for the line of credit borrowed. You will be charged on the due date of your bill (before the daily trade window).

When charged, the amount due is automatically deducted from your M1 cash balance. If there is not enough cash to cover your bill, M1 will extend additional credit to cover the amount. Please note, if you have neither cash nor credit available, M1 will sell holdings from your portfolio to pay your interest due. 

Loan repayment

Traditional loans use an amortization schedule that includes a percentage of principal and interest. With M1 Borrow, repayment of principal and interest are independent of one another.

Principal

A benefit of M1 Borrow is the flexible repayment schedule. We don’t require a minimum monthly loan repayment.

You can pay back any principal amount at any time.

Note: Recurring deposits that are scheduled into your M1 Invest account will not repay your outstanding loan. However, you can create a payback schedule by going to the Transfers tab, clicking the "move money" button, selecting "Recurring Transfer," and inputting Borrow as the "To" account. To contribute toward your principal, you can also go to the “Borrow” tab and click the “Pay back” button.

Interest

Interest on your loan accrues daily, and you will only be charged for the days that your loan is outstanding. We calculate interest at the end of the month, and you will receive a statement within seven days of the month closing.

Repayment of interest can happen in one of three ways, and M1 automates interest repayment for your convenience.

Here’s the order in which we automate interest repayment:

1. Cash balance: We always pull from cash you keep in your account first.
2. Borrow additional funds: If your cash balance is insufficient and you have not maxed out your available credit, we will borrow more to cover the cost of your interest. We do this so you avoid having to sell securities from your portfolio and avoid taxable events. This also helps keep your loan on your schedule so you can repay it when it’s most convenient for you.
3. Sell securities: This is our last resort for interest repayment. If options 1 and 2 are not available, we will sell securities to cover the cost.

The M1 Borrow rate is based on short-term interest rates and is subject to change if and when the Federal Reserve changes their target for the Federal Funds rate. The M1 Plus membership includes a reduction on the M1 Borrow base rate. This reduction is effective immediately upon M1 Plus sign up and will be reflected on the Borrow bill. You can learn more about M1 Plus here.

Using margin involves risks: you can lose more than you deposit, you are subject to a margin call, and interest rates may change. To learn more about the risks associated with margin loans, please see our Margin Disclosure. M1 Borrow available on margin accounts with a balance of at least $10,000. Does not apply to retirement accounts.