Interest Rate Calculator · Practical guide
How to Find the Interest Rate from a Monthly Payment
When a lender quotes only a payment, work backward to the rate — the calculator above solves it instantly.
At a glance
The Short Answer
There is no simple formula you can rearrange — the loan payment equation must be solved numerically. The calculator above uses binary search to find the exact rate. For example, a $20,000 loan with payments of $377 a month for 5 years implies an annual rate of 4.95%. Enter any loan amount, payment, and term to get yours.
Interactive tool
Interest Rate Calculator
Enter your own values, then compare the result with the examples below.
Results
Why You Can't Just Divide
Total interest divided by principal gives an average, not the rate, because each payment blends principal and interest in changing proportions. The true rate r must satisfy M = P × i(1+i)^n / ((1+i)^n − 1), where i = r/12 and n is the number of months. That equation has no algebraic solution for i, so the calculator tests rates between 0% and 100% until the computed payment matches yours.
Worked Example: Reading a Dealer's Quote
A dealer offers a $20,000 car at "$377 a month for 60 months" without stating the rate. The calculator reveals 4.95%, total interest of $2,620, and total cost of $22,620. Now you can compare that against your bank's pre-approval on equal terms instead of guessing from the payment alone.
What the Payment Tells You
Holding the loan amount and term fixed, a higher payment always means a higher rate. On that same $20,000, 5-year loan:
| Monthly Payment | Implied Rate | Total Interest |
|---|---|---|
| $377 | 4.95% | $2,620 |
| $400 | 7.42% | $4,000 |
| $450 | 12.50% | $7,000 |
A $73-per-month difference between the first and last rows more than doubles the interest you pay.
Frequently Asked Questions
Can I solve for the rate with a regular calculator?
Not directly. The payment formula can't be algebraically rearranged to isolate the rate, which is why financial calculators and this tool use trial-and-error methods like binary search.
Why does the calculator say my payment is too low?
If your monthly payment multiplied by the number of months is less than the loan amount, the loan can never be paid off at any rate — even 0%. Raise the payment or shorten the term.
Does this work for mortgages?
Yes, for any fully amortizing fixed-rate loan. A $300,000 loan at $1,798.65 a month for 30 years implies exactly 6.00%. It won't work for adjustable rates, balloons, or leases.
How accurate is the result?
The calculator narrows the rate to a tiny fraction of a percent and displays four decimal places, far more precision than lenders typically quote.