Interest Rate Calculator (Find the Rate)
Work out the interest rate hidden in a loan's monthly payment.
When you know the payment but not the rate
Dealers and sellers often quote only a monthly payment. If you know the amount borrowed, the payment and the number of years, this calculator finds the yearly interest rate behind it, so you can compare offers fairly.
How it works
The payment formula payment = L × r ÷ (1 − (1 + r)−n) cannot be rearranged to give r directly, so the calculator tries monthly rates until the formula matches your payment.
Example
A 200,000 loan repaid with 1,073.64 a month for 30 years has an interest rate of 5%, and costs about 186,510 in interest.
The rate found is the nominal yearly rate with monthly compounding, the way most loans are quoted. Fees, insurance and add-ons in the payment will make the rate look higher than the lender’s quoted rate.
Frequently asked questions
Why is the rate higher than quoted?
The payment may include fees, insurance or other charges, which push up the rate this calculator finds.
Does it work for mortgages?
Yes, for mortgages compounded monthly. Canadian fixed-rate mortgages compound twice a year, so the figure will differ slightly.
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