Interest Rate Calculator
Enter a loan amount, a monthly payment and a term, and find the true annual interest rate behind the loan.
The rate is a close guide — real loans add fees and use exact day counts.
How to use this interest rate calculator
This interest rate calculator works out the true annual rate behind a loan from three numbers: the amount you borrowed, what you pay each month, and how many months the loan runs for. It does not need an account, and nothing you type is saved or sent anywhere.
Step 1: Enter the loan amount — the full sum you borrowed.
Step 2: Enter your monthly payment, the fixed amount you pay the lender each month.
Step 3: Enter the term in months, then read the result. The calculator shows the annual interest rate, the monthly rate, the total amount you will have paid by the end of the term, and the total interest on top of the loan amount.
Worked example
Take a loan of $10,000, paid back at $200 a month for 60 months. The total paid is 60 × $200 = $12,000, and the total interest is $12,000 − $10,000 = $2,000. The calculator solves for the monthly rate that makes those numbers fit, and finds a monthly rate of about 0.62%. That is an annual nominal rate of about 7.4%, because the monthly rate is multiplied by 12 to give the annual figure.
A second example: borrow $15,000, pay $350 a month for 48 months. The total paid is 48 × $350 = $16,800, and the total interest is $1,800. Here the monthly rate comes out at about 0.47%, which is an annual nominal rate of about 5.7%.
What the rate means
The interest rate is the price of borrowing: the percentage of the loan the lender charges for letting you use the money. A higher rate means each payment covers less of the amount you borrowed, so more of the money goes to interest and the loan costs more overall. A lower rate means more of each payment goes towards the amount you borrowed, so the total interest is lower.
The same payment gives a different rate over a different term, because the rate is what makes the loan, the payment and the term balance. Stretch the term out and the borrower pays more months of interest, so a lower rate can still produce the same monthly payment. Shorten the term and the same payment points to a higher rate, because the loan is cleared faster while the lender still gets the same money each month.
Nominal vs effective rate
This tool shows the nominal annual rate with monthly compounding: the monthly rate multiplied by 12. The effective annual rate is a little higher than the nominal rate, because monthly compounding means interest is charged on interest through the year. For example, a nominal rate of 7.4% built from a monthly rate of about 0.62% works out to an effective annual rate of about 7.7%. When you compare loans, check which rate each lender quotes — nominal rates are the usual headline figure, but the effective rate is what the loan truly costs over a year.
Frequently asked questions
What is an interest rate?
An interest rate is the price of borrowing money, written as a percentage of the amount borrowed. It is what the lender charges for letting you use the money over the term of the loan. The rate decides how much of each monthly payment goes to interest and how much goes towards the amount you borrowed.
Why does the same payment give a different rate for a different term?
Because the rate is what makes the loan amount, the payment and the term balance. Over a longer term you pay interest for more months, so a lower rate can still produce the same monthly payment. Over a shorter term the loan is cleared faster while the lender still gets the same money each month, so the same payment points to a higher rate.
What is the difference between nominal and effective rate?
The nominal annual rate is the monthly rate multiplied by 12 — the number this tool shows. The effective annual rate is a little higher, because monthly compounding means interest is charged on interest through the year. For a nominal rate of 7.4%, the effective rate is about 7.7%. When you compare loans, make sure you are comparing the same kind of rate.
Does the rate include fees?
No. This calculator works out the rate from the loan amount, the monthly payment and the term only. Real loans add fees, such as arrangement fees and charges, on top of the interest — and those fees raise the true cost of the loan. Check the lender’s own APR or total cost figures, which do include the fees.
Is this exact?
The rate is solved to one decimal place, so treat it as a close guide. Real loans add fees and use exact day counts, so the rate a lender quotes can differ slightly from the result here. Use this calculator to compare loans and to understand the rate behind a payment, not as a replacement for the lender’s own figures.