Interest Rate Calculator
Calculate the interest rate for a loan when you know the loan amount, term, and monthly payment.
| Interest Rate | Monthly Payment | Total Interest | Difference |
|---|---|---|---|
| 5.00% | $1,074 | $186,512 | -$45,488 |
| 5.25% | $1,104 | $197,587 | -$34,413 |
| 5.50% | $1,136 | $208,808 | -$23,192 |
| 5.75% | $1,167 | $220,172 | -$11,828 |
| 6.00% | $1,199 | $231,676 | -$324 |
| 6.25% | $1,231 | $243,316 | +$11,316 |
| 6.50% | $1,264 | $255,089 | +$23,089 |
| 6.75% | $1,297 | $266,991 | +$34,991 |
| 7.00% | $1,331 | $279,018 | +$47,018 |
Loan Amount
Enter the total amount you're borrowing.
Loan Term
Select the length of your loan in years.
Monthly Payment
Enter how much you're paying each month.
Payment Frequency
Choose how often you make payments on your loan.
Understanding Interest Rates
What is an Interest Rate?
An interest rate is the amount a lender charges a borrower for the use of assets, expressed as a percentage of the principal (the amount borrowed). Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR).
How Interest Rates are Determined
Interest rates are influenced by several factors, including:
- The federal funds rate set by the Federal Reserve
- Inflation rates
- The borrower's credit score and history
- Loan term (shorter terms typically have lower rates)
- Loan amount and down payment
- Type of loan (mortgage, auto, personal, etc.)
Types of Interest Rates
There are several types of interest rates you might encounter:
- Fixed Rate: Remains the same throughout the loan term
- Variable/Adjustable Rate: Can change over time based on market conditions
- Simple Interest: Calculated only on the principal amount
- Compound Interest: Calculated on the principal plus accumulated interest
How Interest Rate Affects Your Loan
Even a small difference in interest rate can have a significant impact on your total loan cost. For example, on a $200,000 30-year mortgage, the difference between a 4% and 5% interest rate could mean paying tens of thousands more in interest over the life of the loan.
This calculator helps you determine what interest rate you're effectively paying based on your loan amount, term, and monthly payment. It can also help you compare different interest rates to see how they affect your payments and total interest paid.