The interest rate is the price of borrowing money — and small differences add up to thousands of dollars. Our free interest rate calculator shows you exactly what a loan costs: the monthly payment, the total interest and the total amount you will pay back. It also has a solve-for-rate mode: if you know the loan amount, the monthly payment and the term, it works out the interest rate behind them.
Educational estimates only, not financial advice.
How to use this calculator
- Choose a mode — “Payment from rate” if you know the interest rate, or “Solve for rate” if you know the monthly payment instead.
- Enter the loan amount and the term — for example, $15,000 over 5 years.
- Enter the rate (or the payment) — depending on the mode you picked.
- Read the result — the monthly payment, total interest and total paid, plus a short summary of how the balance falls over the years. Change the rate to see how much a better deal is worth.
How it works
The calculator uses the standard loan formula: the monthly payment is worked out from the loan amount, the monthly interest rate (the annual rate divided by 12) and the number of payments. Each monthly payment first covers that month’s interest; the rest reduces the balance. That is why early payments are mostly interest and later ones are mostly principal.
Worked example: borrow $15,000 at 7% for 5 years (60 months). The monthly payment is $297.02, the total paid is $17,821.08, and $2,821.08 of that is interest. At 10% instead, the same loan costs $318.71 a month and $19,122.34 in total — a 3-point rate difference costs $1,301.26 more. That is why comparing rates before you borrow is worth the effort.
Frequently asked questions
What is an interest rate?
The percentage a lender charges you each year for borrowing money. A 7% rate on a $15,000 loan means you pay roughly 7% of the balance in interest over a year — spread across your monthly payments.
How is interest calculated on a loan?
Most loans use amortisation: each monthly payment covers that month’s interest first, then the rest reduces the balance. As the balance falls, less of each payment goes to interest and more goes to the loan itself.
What is the difference between an interest rate and APR?
The interest rate is the cost of the loan itself. The APR (annual percentage rate) adds lender fees and other charges, so it is usually slightly higher. APR is the fairer number when you compare two loans.
What is a good interest rate?
It depends on the loan type, the term and your credit score. A mortgage rate under 7% is good in today’s market; a personal loan under 10% is strong; a credit card at 20%+ is expensive. Always compare at least three offers.
How can I get a lower interest rate?
Improve your credit score, choose a shorter term, make a bigger down payment, or compare more lenders. Even half a percentage point matters on a large loan — try it in the calculator and see.
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