Working back from the payment
Sometimes you're told the monthly payment but not the rate, for example on store finance or an informal loan. The calculator finds the rate that makes the payments repay the loan.
The calculator finds the monthly rate at which your payments exactly repay the money you actually receive, then turns it into an annual rate including the effect of compounding: APR = (1 + monthly rate)^12 − 1. Fees paid upfront reduce the money you receive, so they push the APR up.
Worked example
Borrowing £5,000 and repaying £160 a month for 36 months means a total cost of £760, an interest rate of about 9.4% and an APR of 9.8%.
Checking a quote
If the rate you work out is higher than you were told, ask the lender to explain the difference; there may be fees or a different payment schedule.
Inputs for the APR loan rate calculator
Amount borrowed
The amount of the loan.
Upfront fees
Any arrangement or other fees you pay at the start, or that are taken from the loan. Enter 0 if there are none.
Monthly payment
Your regular monthly repayment from the quote or agreement.
Term
How many months the payments last.
CALCULATOR QUESTIONS
APR loan rate calculator questions
How do I find the interest rate on a loan?
Enter the amount, monthly payment and term above; the calculator works out the rate.
What's the difference between APR and the interest rate?
The interest rate is what's charged on the balance. The APR also includes compulsory fees and the effect of compounding, so it's the better figure for comparing deals.
What if my rate looks too high?
Check for fees and the exact payment schedule, and ask the lender.
Does this work for interest-only loans?
No. It assumes equal payments that repay the loan.