Interest Rate Calculator

What Does This Calculator Do?

This interest rate calculator works in reverse — instead of calculating your payment from a known rate, it finds the implied annual interest rate (APR) when you already know your monthly payment, loan amount, and term. This is useful when you have a loan offer or existing loan and want to verify or discover the actual rate.

Common use cases include: verifying dealer financing quoted as a monthly payment (dealers often quote only the payment, not the rate), understanding what rate your old car or student loan is actually at, comparing loan offers where different lenders quote different terms, and checking whether refinancing makes sense by knowing your current effective rate.

The calculator uses a numerical bisection method to solve the amortization formula in reverse. This approach finds the monthly rate that produces exactly your stated payment for the given principal and term, then converts it to an annual rate.

How the Interest Rate is Found

The standard amortization formula calculates the monthly payment M given principal P, monthly rate r, and term n:

• Bisection method — Start with a low rate (0%) and high rate (500% monthly) and repeatedly halve the search range until the calculated payment matches your actual payment within a tiny margin of error.
• Annual Rate — Monthly rate × 12 × 100 to convert to APR.
• Convergence is typically reached in under 100 iterations to 10 decimal places of precision.

Example: $25,000 Loan, 60 Months

You took out a $25,000 car loan with a 60-month term. Here's what different monthly payments imply about your interest rate:

The difference between a 4% and 10% rate on a $25,000 loan is only $42 per month — but it adds up to over $2,530 more in total interest. When shopping for a loan, even small rate differences matter significantly over 5 years.

Based on $25,000 loan amount, 60-month term. For illustrative purposes only.