Interest Rate Calculator
Calculate the interest rate on a loan given payment amount, loan amount, and term. Reverse-engineer your loan's APR and monthly rate.
Monthly Payment
$410.33
for 60 months
Loan Amount
$20,000.00
Total Interest
$4,619.84
Total Cost
$24,619.84
Interest %
18.8%
About the Interest Rate Calculator
When you know your loan amount, monthly payment, and loan term but not the interest rate, our interest rate calculator reverse-engineers the rate being charged. This is invaluable for verifying loan quotes, detecting hidden charges, and comparing the effective rate across different loan structures. It's also useful for calculating the return rate implied by an investment's cash flows.
How It Works
Finding the interest rate from payment, principal, and term requires iterative calculation (Newton-Raphson method), as no closed-form solution exists. The calculator solves for r in the payment formula M = P × [r(1+r)^n] / [(1+r)^n - 1] by testing rates until the computed payment matches your actual payment. The difference between the nominal rate and APR (which includes fees) is particularly important for comparing loan offers.
Tips & Best Practices
- ✓APR is always higher than the nominal interest rate because it includes origination fees and other costs.
- ✓A loan with a 6% rate and $3,000 in fees on a $150,000 loan has an APR of approximately 6.4%.
- ✓Payday loans with "$15 per $100 borrowed" have an implied APR of approximately 391%.
- ✓The effective annual rate (EAR) accounts for compounding frequency — monthly compounding > annual.
- ✓Credit cards show APR but charge interest daily — the effective rate is slightly higher than stated APR.
Who Uses This Calculator
Borrowers verifying lender quotes, investors calculating the implied return on seller-financed deals, and analysts comparing loan products with different fee structures all use this reverse interest rate calculator.
Optimised for: USA · Canada · UK · Australia · Calculations run in your browser · No data stored
Frequently Asked Questions
How is the interest rate calculated?
Interest rate = (Total Interest Paid / Principal) / Time. For accurate APR, factor in all fees and timing of payments.