Interest Rate Calculator

How this interest rate calculator works

Enter the amount you are borrowing, the loan term, and the monthly payment, and the interest rate calculator finds the fixed annual rate that makes those payments pay off the loan exactly. It is useful when a lender or car dealer quotes only a monthly payment, not the rate. The result also shows the total of all payments, the total interest, a principal and interest breakdown, and a full amortization schedule. That makes it a handy car loan interest rate calculator for checking a dealer's financing offer.

For example, borrowing $28,000 and paying $550 a month for 5 years means paying back $33,000 in all. The $5,000 difference is interest, which works out to a 6.664% interest rate.

How to calculate an interest rate on a loan

A fixed-rate loan with equal monthly payments follows the standard amortization formula. With loan amount P, monthly rate r, and n monthly payments:

Monthly payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

The formula can't be rearranged to give r directly, so this loan interest rate calculator works it out numerically: it tries rates, narrowing the range each time, until the payment the formula gives matches yours to a tiny fraction of a cent. The annual rate shown is the monthly rate × 12, the way loan rates are normally quoted.

Frequently asked questions

What is my car loan interest rate if I only know the payment?

Enter the amount financed, the number of months, and the payment from your quote. A $25,000 car loan at $480 a month for 60 months has a 5.714% rate and costs $3,800 in interest. Stretch the same payment to 72 months and the rate jumps to 11.323%, with $9,560 in interest.

Is the interest rate the same as the APR?

Not always. This rate calculator works from the amount you actually borrow. If fees were added to the loan, enter the amount including them, and the rate you get is the rate on that full balance. An APR also counts upfront fees, so for a loan with fees the APR is higher than the interest rate. Use the APR Calculator to include them.

Why doesn't the calculator accept a payment that is too low?

If the payments add up to less than the amount borrowed, no positive interest rate can pay the loan off. Raise the payment or lengthen the term. If the payments add up to exactly the amount borrowed, the loan has a 0% rate.

Does a longer loan term mean a lower interest rate?

Not by itself. A longer term spreads the principal over more payments, so the same payment over more months means you are paying more interest, at a higher rate. Compare offers by entering each one's amount, term, and payment.

Limitations

The calculator assumes a fixed rate, equal monthly payments that start one month after the loan is made, and no fees, insurance, or balloon payment. Payments rounded to the cent can shift the rate in the third decimal place. Treat the result as an estimate, not financial advice, and check the rate in your loan disclosure.