Interest Rate Calculator
If a lender or dealer quotes only a payment, this calculator works backward to the interest rate you are actually being charged.
Enter your figures below. Results update as you type.
Interest rate (APR)7.42%
- Principal 83%
- Interest 17%
- Total of payments
- $24,000.00
- Total interest
- $4,000.00
- Effective annual rate (APY)
- 7.678%
How the Interest Rate calculation works
Solve for i in: payment = P x i / (1 - (1 + i)^-n)
There is no closed-form solution for the rate, so the calculator narrows it down numerically until the payment matches. The result is the nominal APR; the effective annual rate shown below it includes monthly compounding.
Frequently asked questions
Why is the APR I calculate higher than the rate I was quoted?
Fees rolled into the loan raise the true cost. If you received less cash than the stated loan amount, enter the amount you actually received to see the APR including fees.
How do I calculate the interest rate on a loan?
There is no simple formula that gives the rate from the payment, so it is found by trial: test a rate, compare the payment it produces with yours, and adjust. This calculator does that automatically from the loan amount, payment and term.
How do I convert a yearly interest rate to a monthly rate?
Divide the APR by 12. An APR of 7.5% is 0.625% a month. Lenders use this monthly rate to work out each payment.
What is the difference between a flat rate and a reducing balance rate?
A flat rate charges interest on the original amount for the whole term. A reducing balance rate charges interest only on what you still owe. For the same loan, a flat rate works out to nearly double the equivalent reducing rate, so always compare APRs.
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