Loans
Interest Rate Calculator: Find the Rate on Any Loan
An interest rate calculator works backwards: you know the loan amount, the monthly payment and the term, and you want the rate. Dealers and lenders often talk about the monthly payment, but the rate is what decides how much the loan really costs. This guide explains how to find the interest rate on a loan without heavy math, with a full car loan example. To get the rate instantly, use our [interest rate calculator](/calculators/interest-rate-calculator).
By the MoneyTools Editorial TeamLast updated 7 min readEditorial Policy
Why the interest rate matters more than the monthly payment
A lower monthly payment can hide a higher rate or a longer term. Stretching a loan from 60 to 84 months makes each payment smaller but adds months of interest. Knowing the rate lets you compare offers on equal terms.
How an interest rate calculator solves for the rate
The loan payment formula links four things: the amount borrowed, the rate, the number of payments and the payment. If you know three, you can find the fourth. There is no simple way to rearrange the formula for the rate, so calculators use trial and error: guess a rate, compute the payment, then adjust the guess up or down until the payment matches. It takes a computer a fraction of a second.
Payment = P × r ÷ (1 − (1 + r)^−n)
- P
- Loan amount
- r
- Monthly rate (annual rate ÷ 12) — the unknown
- n
- Number of monthly payments
Worked example: $25,000 car loan
Worked example
Finding the rate on a car loan
- Loan amount: $25,000
- Monthly payment: $480
- Term: 60 months
- Total paid: $480 × 60 = $28,800
- Total interest: $28,800 − $25,000 = $3,800
- Rate that produces a $480 payment: about 5.7% a year
The $480 payment implies an interest rate of roughly 5.7%.
| Monthly payment | Term | Total paid | Total interest | Implied rate |
|---|---|---|---|---|
| $460 | 60 months | $27,600 | $2,600 | ≈ 4.0% |
| $480 | 60 months | $28,800 | $3,800 | ≈ 5.7% |
| $500 | 60 months | $30,000 | $5,000 | ≈ 7.4% |
| $520 | 60 months | $31,200 | $6,200 | ≈ 9.1% |
An extra $20 a month looks small, but it raises the rate by well over a full percentage point and adds $1,200 of interest over the loan.
APR vs interest rate
The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) adds certain lender fees and spreads them over the loan, so it is usually equal to or a bit higher than the rate. If you solve for the rate using the amount you actually receive after fees, you get something close to the APR. Learn more in APR vs Interest Rate or use the APR Calculator.
Find your rate with a calculator
Enter the loan amount, monthly payment and number of payments in the interest rate calculator to get your rate instantly, or test different rates in the Loan Calculator. For a down payment or a term in months, the Payment Calculator is handy.
Run your own numbers
Find the interest rate on any loan from the amount, monthly payment and term.
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