Find the implied interest rate (APR) of any loan by entering the loan amount, monthly payment and loan term. Also calculate APY from APR, compare effective rates across different compounding frequencies, and reverse-calculate rates for savings goals.
Select from three modes: (1) Find Loan APR — given loan amount, monthly payment and term, find the implied interest rate; (2) APR to APY — convert a stated rate to the effective annual yield accounting for compounding; (3) Savings Goal Rate — find what return you need to reach a target balance.
For Find Loan APR: enter the original loan amount, your monthly payment, and loan term in months. For APR to APY: enter the APR and compounding frequency. For Savings Goal Rate: enter your starting amount, monthly contribution, target amount and time horizon.
The tool displays the calculated APR with context — comparing it to average rates for your loan type. The APY conversion shows the difference between what lenders advertise (APR) and what you actually pay or earn (APY). Use this to compare loan offers accurately.
APR is the annual cost of borrowing expressed as a percentage. For loans, it represents the interest rate before accounting for compounding effects — it is what lenders are required to disclose. For savings, it is the stated rate before compounding. APR is useful for quick comparisons but does not capture the full cost of compounding.
APY is the effective annual rate after accounting for compounding. If a savings account pays 5% APR compounded monthly, the APY is 5.12% — meaning you earn slightly more than 5% per year because each month's interest earns interest the following month. For borrowers APY means you pay slightly more than the stated APR. Always compare APY for savings products.
If you know your loan amount, monthly payment, and remaining term, you can calculate the implied rate. This calculator uses Newton-Raphson iteration to solve the amortization formula for r: M = P × r(1+r)ⁿ / ((1+r)ⁿ - 1). This is useful when you received a loan and want to verify the rate, or when comparing an offer to your existing rate.
Lenders often advertise the nominal rate but are required to disclose APR. However, true APR for mortgages includes fees, points, mortgage insurance and closing costs amortized over the loan life — making it higher than the stated rate. Use the disclosed APR (from the Loan Estimate document) rather than the advertised rate to compare mortgage offers accurately.
A fixed interest rate stays the same for the entire loan term, making payments predictable. A variable (adjustable) rate changes periodically based on a benchmark index (like SOFR), which means payments can increase or decrease. Fixed rates provide payment certainty; variable rates often start lower but carry the risk of future increases. This calculator works for fixed-rate loans.
Daily compounding means interest is calculated and added to your balance every day. Your balance grows faster than with monthly or annual compounding at the same stated rate. For example, 5% APR compounded daily produces an APY of 5.127%, while 5% APR compounded annually stays at exactly 5% APY. This is why high-yield savings accounts advertise both APR and APY.
