Interest Rate Calculator
Know the payment but not the rate? Enter the loan amount, monthly payment and term to find the interest rate you're actually paying.
About the Interest Rate Calculator
Dealers and lenders often quote a monthly payment rather than a rate. This calculator works backwards from that payment to the yearly interest rate built into it, so you can compare offers fairly.
There is no simple formula to rearrange for the rate, so the calculator tries rates, checks the payment each gives, and narrows in until it matches your payment exactly.
The formula
Payment = P × i ÷ (1 − (1 + i)⁻ⁿ), solved for i
- P
- loan amount
- i
- monthly interest rate; yearly rate = i × 12
- n
- number of monthly payments
The effective yearly rate, (1 + i)¹² − 1, is a little higher than i × 12 because interest compounds monthly.
How to read your result
- Yearly rate is the nominal rate lenders usually quote.
- Effective rate shows the true yearly cost with compounding.
- If the quoted payment includes fees, the rate found here is closer to the APR than the advertised rate.
Worked example
$20,000 repaid at $400 a month for 60 months
- Total paid = $24,000, interest = $4,000
- Rate that gives a $400 payment: 7.420% a year
Questions people ask
Why is the effective rate higher?
Interest is added monthly, and later interest is charged on earlier interest. Over a year that makes the true rate slightly higher than the monthly rate × 12.
Can I use this for savings?
This version is for loans repaid in equal monthly payments. For savings growth use the compound interest calculator.