Finance Calculator

Interest Rate Calculator: Your Free Tool for Unraveling Loan Costs!

Your key to smart finance! Use our free online tool to instantly calculate your interest rate and total loan cost based on a fixed monthly repayment plan. Master your finances starting today!

Interest Rate Calculator Shows Total Interest Paid, Total Payments, and Interest Rate

Easy-to-use interest rate calculator shows your interest rate, total monthly payments, and total interest you will pay on a loan.

Our Interest rate calculator shows you how much you can expect to pay in interest on a loan, as well as the interest rate and your total payments. Your total payment includes the sum of paying back the original loan amount, plus interest. An interest rate calculator is also known as a loan calculator.

You can compare different scenarios by inputting different numbers into the calculator to see how it affects the total amount of interest you will pay and your interest rate.

Interest Rate Calculator Input Fields

Here are the details of how the interest rate calculator works, along with the information you will need to fill in the required fields to calculate your interest rate and payment totals.

All three loan detail fields are required in order to get the loan interest rate and other calculations. You don’t need to know precise numbers; you can estimate or put in various numbers to see how they affect the outcomes.

Loan Amount

This is how much the loan was taken out for. It is also referred to as the principle on a loan. For example, if you are buying a car that has a purchase price of $30,000 and you are using an auto loan to pay for the entire amount, then the loan amount is $30,000.

Loan Term (years)

This is how many years you will take to pay back the loan – the time period of the loan.

Monthly Payments

This is the currency amount of your monthly payments. For example, if you agree to pay $500 per month, input $500 in this field. If you agreed to pay back $25 per month, then input that. If you are unsure how much you can pay, or what the monthly payment on a loan will be, use the Payment Calculator.

What the Interest Rate Calculator Results Mean

The numbers you put into the calculator affect the answers that come out. In the Results column, you will see data related to the inputs you put in. We’ll go over each field and what it means.


Interest Rate

This is the interest rate you will be paying on the loan. It isn’t quite as simple as taking your total interest paid and dividing it by the original loan. For example, if you pay back a $100 loan in 12 monthly payments of $10, you pay a total of $20.

Many people erroneously assume that in this situation, the interest rate is 20%. It isn’t. Each month your loan balance is dropping, yet you are still paying the same monthly payment. The interest rate is actually 35%! That is why you want to use a calculator when doing loan math.

You can use the Effective Interest Rate Calculator to see how monthly (or another time frame) compounding of interest affects the actual interest rate you are paying. Interest is also known as the annual percentage rate or annual percentage yield.


Total Monthly Payments

How much you will pay over the total life of the loan. This is your monthly payment multiplied by how many months you will be paying that amount.


Total Interest Paid

How much interest you will have paid, in dollars, over the life of the loan. This is your total monthly payments minus the original loan amount.

Interest Rate Example

Next, we’ll illustrate using a real-world example showing how to use the Interest Rate calculator. You will need a loan amount, the term of the loan, and your monthly payment. You can make these numbers up to see the interest you will pay on various scenarios, or you may plug in actual loan data.

Assume a friend wants to borrow $5,000 from you. They agree to pay the money back over two years (24 months) at $250 per month. Using the calculator, you, and them, can determine how much interest they will be paying and the interest rate.

Input 5000 into the Loan Amount.

Put 2 into the Loan Term.

The Monthly Payments are 250.

Based on these parameters, you can see that the interest rate is 18.16% and the total Monthly Payments are $6,000. Since the original loan amount was $5,000, the total interest paid is $1000.

The calculator can also help you figure out the monthly payments required to pay back the loan.

In the example above, if you input 200 in the monthly payment field, over 24 months the total payments will only be $4800. That’s less than the loan amount of $5000. Total Interest Paid in this case, will be negative (-$200), indicating that you need to increase your monthly payments for the loan to be paid back.

The ending amount, how much you paid (or received) is also called future value, because it is an amount in the future. The loan amount or current value of something is called present value.


What is the simple interest rate formula?

Simple interest is calculated using the formula: Interest = Principal x Interest Rate x Number of Years The principal is the beginning balance of the loan, the interest rate is the yearly rate expressed as a decimal, and the number of years is how many years the interest is paid. Remember that the simple interest formula doesn’t take into account compounding. Most loans and investments do have compounding.

What’s an example of the simple interest rate formula?

If you take out a bank loan for $10,000 at 5% interest for 2 years, you would pay $1,000 in interest (10,000 x 0.05 x 2). Over the life of the loan, you will repay a total amount of $11,000, which is the original balance plus interest. If you are interested in mortgage rates or monthly mortgage payments, use a mortgage calculator, since mortgages are much more complicated than conventional loans.

What is the difference between interest rate and effective interest rate?

The effective rate includes the effects of compounding. Compounding is when interest is paid on the original balance and accumulated interest. Quoted interest rates, often called the stated or nominal rate, don’t account for this compounding. The effective rate is a more accurate representation of what you are actually paying/receiving in interest.

How can you get lower interest rates?

Lower interest rates are offered to clients that pose less of a default risk. Therefore, having a high credit score can help you get lower interest rates on various loan types. You can also offer collateral for a loan (secured loans versus unsecured loans), which helps offset the risk to the lender. In exchange, they may offer you a lower rate. Also pay attention to income ratios, the more excess monthly income you have over expenses, generally the better.

How much interest does $1000 earn in a year?

Checking accounts typically pay less than 1% interest per year, or less than $10 a year. Savings accounts may pay up to 5% per year, which is about $50 per year. Investing in the S&P 500 U.S. stock index has tended to produce average returns of 10% over the last 100 years, or about $100 per year.

Final Thoughts on the Interest Rate Calculator

Use an interest rate calculator when you need to figure out your total monthly payments, or the interest paid on the loan. It will also show you the interest rate, which is important when comparing loans.

To use the calculator, you only need a few variables: the loan amount, the loan term, and the monthly payment amount. You can use actual loan data or make-up numbers to see how loans and interest works.

Also see our Investment Calculator that shows how your investments can grow given various rates of returns. The Income Tax Calculator gives you an approximation of the taxes you will pay given your income and deductions.