Interest Rate Calculator

What This Calculator Does

This is a reverse calculator that solves for the interest rate when you already know the loan amount, term, and monthly payment. It's particularly useful when:

• • Car dealers or lenders only provide monthly payment information
• • You want to verify the actual interest rate on a loan offer
• • You need to understand the true cost of financing
• • You're comparing different loan offers side-by-side

How It Works

The calculator uses the Newton-Raphson numerical method to find the interest rate that satisfies the standard loan payment formula:

• M = Monthly payment (known)
• P = Principal loan amount (known)
• r = Monthly interest rate (solving for this)
• n = Number of months (known)

The algorithm iteratively adjusts the rate until it finds the value that produces your exact monthly payment amount.

Common Use Cases

• Auto Loans: Dealers often advertise monthly payments without clearly stating the interest rate. Use this calculator to find out what rate they're actually charging.
• Personal Loans: When you know your monthly payment but want to verify the APR matches what was promised.
• Existing Loans: If you have a loan but aren't sure of the interest rate, enter your loan details to find it.
• Loan Comparison: Compare different loan offers by entering their terms and payments to see which has the best rate.

Example Calculation

Let's say you're looking at a car loan:

• • Loan Amount: $32,000
• • Loan Term: 36 months (3 years)
• • Monthly Payment: $960

The calculator reveals that this loan has an interest rate of 5.065% APR. Over the life of the loan, you'll pay $34,560 total, which includes $2,560 in interest.