Money

Interest Rate Calculator

Find the interest rate on a loan when you know what you borrowed, what you pay each month and for how long — the number a payment quote often leaves out.

Enter the loan amount, monthly payment and term to find the interest rate.

Exact calculation. Given your inputs, this is the answer — no estimation involved.

How this calculator works

A fixed-rate loan’s monthly payment depends on three things: the amount, the rate and the term. If you know the payment, the amount and the term, the rate can be worked out.

There is no formula that gives the rate directly, so the calculator searches for it. A higher rate always means a higher payment, so it can close in on the one rate that produces your payment exactly. A financial calculator or a spreadsheet’s RATE function does the same.

The answer is shown as an annual rate, the way US lenders quote rates: the monthly rate times 12. It is also shown as an effective annual rate, which adds the interest charged on interest over a year of monthly compounding.

If you enter the amount you actually received rather than the amount on the loan papers — after an origination fee came out, say — the rate you get is the loan’s yearly cost including that fee. That is what an APR is designed to capture.

The formula

Exactly what happens to your numbers, step by step.

The payment the rate must produce
```
payment = P × i ÷ (1 − (1 + i)^−n)
```
P is the amount borrowed, i the monthly rate, n the number of payments. Solved for i numerically.
Annual rate
```
annual rate = 12 × i
```
Effective annual rate
```
effective rate = (1 + i)^12 − 1
```

A worked example

A $25,000 car loan repaid at $500 a month for 5 years.

What you enter

Loan amount: $25,000
Monthly payment: $500
Term: 5 years

Step by step

Total of payments: 60 × $500 = $30,000
Total interest: $30,000 − $25,000 = $5,000.00
Monthly rate that fits: 0.6183%
Annual rate: 0.6183% × 12 = 7.42%
Effective annual rate: 7.68%

Interest rate: 7.42% a year

Paying $5,000 on $25,000 sounds like 20%, but you only owe the full $25,000 in the first month. The balance falls with every payment, so measured against what is still owed, the interest works out to 7.42% a year.

Assumptions

Every result here rests on these. Change your inputs and the result changes with them.

A fixed rate, equal monthly payments, and the loan fully repaid by the last payment, with no balloon payment at the end.
Interest charged monthly on the remaining balance, as on most car, personal and mortgage loans.
A payment rounded to the cent can shift the last decimal place of the rate on a small or short loan.

What this cannot tell you

It cannot see a balloon payment, deferred interest or a payment that changes over time. For an adjustable-rate loan, it gives only the rate implied by the payment you enter.
Fees paid up front in cash are counted only if you take them off the loan amount yourself.
Lenders work out APRs under the Truth in Lending Act’s rules on which fees count, so a disclosed APR can differ slightly from this.

Questions people ask

How do I find the interest rate on my car loan?

Enter the amount financed, the monthly payment and the number of months from your contract. The Truth in Lending disclosure in the contract lists the amount financed, and the APR, so you can compare the two.

What is the difference between an interest rate and an APR?

The interest rate is the yearly cost of borrowing the money itself. The APR adds the lender’s fees — points, origination charges and similar costs — and expresses the total as a yearly rate, so it is usually higher. Two loans at the same rate can have very different fees, which is why comparing APRs is fairer.

What is the effective annual rate?

The rate once compounding is counted. A loan at 12% a year charges 1% a month, and 1% a month compounds to 12.68% over a year. US loan rates and APRs are quoted without compounding, so the effective rate is always a little higher.

What if the calculator says no rate fits?

Then the payments add up to less than you borrowed, which no interest rate can produce. Check the term — 60 months, not 5 — and that the payment does not leave out part of the loan, such as a balloon payment due at the end.

Sources and review

Sources

Methodology version 1.0.0 · Last reviewed October 1, 2026

Cite this calculator

For coursework, a resource list or your own site. How every calculator is built and checked is set out on the methodology page.

Citation

Chalk Calculator. (2026, October 1). Interest Rate Calculator (Methodology version 1.0.0). https://chalkcalculator.com/interest-rate-calculator/

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