Interest Rate Calculator
Solve for the annual interest rate when you know the loan amount, payment, and term.
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What is an Interest Rate Calculator?
An interest rate calculator solves for the unknown annual interest rate on a fixed-payment loan when you know the principal, monthly payment, and term. This is useful when a lender quotes only the payment without revealing the rate.
How to Use This Calculator
- Enter the total amount borrowed.
- Enter your fixed monthly payment.
- Enter the loan term in years.
- Click Calculate to find the implied annual interest rate, total interest, and total cost.
Frequently Asked Questions
How does the calculator find the rate?
It uses binary search to numerically solve the loan payment equation for the interest rate that makes the present value of payments equal to the loan amount.
Is this the same as APR?
No. This is the nominal interest rate used to compute payments. APR includes fees and other costs, so it may be slightly higher.
What if my payment is too low?
If the monthly payment is too low to cover even simple interest, the calculator will indicate that no valid rate exists because the loan would never be paid off.
Can I use this for leases or balloon loans?
This calculator assumes fully amortizing fixed payments. Leases and balloon loans require different calculations.