Interest Rate Calculator
Loan amount ($), Monthly payment ($), and Term (months) are solved for the annual rate that produces that payment. Calculate Rate runs an approximation and labels the result as APR.
How to use
- Enter the amount borrowed in Loan amount ($). The sample is 20000.
- Enter the level installment in Monthly payment ($). The sample is 400.
- Enter Term (months). The sample is 60. The term must be at least 1.
- Click Calculate Rate. If the three numbers are not all positive, the result reads Enter valid values. If the payment times the term is not greater than the loan amount, the result reads Payment too low.
- Otherwise the large line is an annual percent called APR, and the detail line is Approx. monthly rate to four decimal places.
When it helps
Use it when a quote shows a payment and a month count but not the rate, and you want the fixed rate that would amortize that loan amount down to zero.
To go the other direction, from a known rate to a payment, use the loan calculator. For simple interest or once-a-year compounding on a balance you are not paying down monthly, use the interest calculator. Neither of those pages solves for a rate.
Limits
The rate is an approximation. The script binary-searches a monthly rate between 0 and 100 percent for 80 steps, then multiplies the low edge of the last bracket by 12 and by 100. The screen calls that product APR. It is twelve times the solved monthly rate, not a fee-inclusive APR from a disclosure form. The printed rate can sit a hair under an exact payment match.
The form does not ask for points, origination, odd days before the first payment, or a balloon. Those costs are absent, so this is arithmetic, not a lender quote. A payment stream that only repays principal, or less, stops at Payment too low and will not report 0 percent.
Questions
Why does an interest-free payoff say Payment too low?
The check is monthly payment times Term (months) compared with Loan amount ($). If that product is less than or equal to the loan, the script returns Payment too low and does not finish the search. An exact zero-interest payoff hits that stop.
Is the APR on screen the same as a bank APR?
No. Banks fold certain fees into the APR they disclose. This page never asks for a fee. The printed APR is only the annualized monthly rate from the search.
How close is the approximation?
Eighty bisections leave a small bracket on the monthly rate. The page prints the lower end of that bracket, and the monthly rate to four decimals. It is an approximation, not a closed-form rate.