Reverse-calculate the interest rate on any loan. If you know the loan amount, the EMI you are paying and the tenure, this tool finds the annual interest rate the bank is effectively charging you - useful for comparing offers, verifying lender quotes and spotting hidden costs.
What you pay every month
Tenure unit
Annual rate
11.51%
Reducing balance
Monthly rate
0.960%
Tenure
60 mo
5.0 years
Total payment
₹6,60,000
60 EMIs of ₹11,000
Total interest
₹1,60,000
Cost of borrowing
The rate is solved numerically. If your bank has bundled processing fees or insurance into the disbursed amount, adjust the principal accordingly to get a more accurate effective rate.
Parte del contenido aún se muestra en inglés.
Most loans in India are quoted as 'EMI per lakh' or 'X% per annum', but the real cost of borrowing is often obscured by processing fees, insurance bundling, flat-rate quotations on consumer-durable and gold loans, and assorted other charges. The interest rate calculator works backward from what you're actually paying - the disbursed principal, the EMI, and the tenure - and reveals the effective rate. This is the only way to compare loans across lenders honestly, because everyone quotes differently and not everyone tells the full story.
This calculator uses Newton-Raphson iteration to solve the EMI equation for the rate (the equation has no closed-form solution for r, so iteration is the only way). The result matches what a CA or financial advisor would compute manually, accurate to better than 0.01% per annum. Use it to verify your bank's quote, expose flat-rate lenders' true rates, or compute the effective rate after fees on any loan you're considering.
Enter the loan principal - the amount actually disbursed to you.
Enter the EMI you are paying every month.
Enter the total loan tenure in months or years.
The calculator solves the EMI equation for the rate and shows it as an annual percentage.
The standard EMI formula EMI = P × r × (1+r)^n / ((1+r)^n − 1) cannot be rearranged for r in closed form. The calculator uses Newton-Raphson - a numerical method that starts from a guess and improves it iteratively until the EMI it predicts matches the EMI you entered, usually within a fraction of a paisa.
Solve r in: EMI = P × r × (1+r)^n / ((1+r)^n − 1)
Newton-Raphson starts with an initial rate guess (typically 12% annually as a midpoint of typical retail loan rates), computes the EMI that rate would produce, compares to the actual EMI you entered, and refines the guess based on the gap. It converges in 5-10 iterations to a rate that produces an EMI matching yours to within fractions of a paisa. The math is the same iteration that Excel's =RATE() function uses.
Flat-rate quotations are where this calculator shines. A 'flat 7% over 5 years' on a ₹5 lakh loan computes interest as 5,00,000 × 7% × 5 = ₹1,75,000, divided over 60 EMIs as ₹3,750 of interest + ₹8,333 of principal = ₹12,083 per month. Plug that EMI back into this calculator and the reducing-balance equivalent is roughly 13.2% - nearly double the headline rate.
For loans with processing fees and other upfront costs, plug the net disbursement (principal minus fees) into the calculator while keeping the actual EMI. The resulting rate will be the true cost of borrowing including the upfront fee - sometimes 0.5-2% higher than the headline rate.
Lender says: ₹3 lakh loan, ₹10,000/month EMI, 36 months, 'flat 7%'. Plug ₹3 lakh principal + ₹10,000 EMI + 36 months into calculator. Effective annual rate ≈ 13.2% on a reducing-balance basis - nearly 2× the headline rate. Knowing this lets you negotiate or shop elsewhere.
₹5 lakh personal loan, 1.5% processing fee + 18% GST = ₹8,850 deducted upfront. Net disbursement ₹4,91,150. EMI ₹10,500/month for 60 months at quoted 14%. Plug ₹4,91,150 (net) + ₹10,500 EMI + 60 months. Effective rate ≈ 14.7% - the fee adds 0.7% to the true cost.
Banks quote a flat rate, a reducing rate or sometimes only the EMI. Knowing the actual reducing-balance rate is the only way to compare loans on equal footing.
It returns the reducing-balance annual rate, which is the standard quoted by RBI-regulated lenders and what your true cost of borrowing actually is.
Yes. If EMI × tenure is less than the principal, no positive interest rate exists - the EMI cannot even cover the principal. The tool flags this case.
Banks may bundle processing fees into the principal, or quote rates inclusive of insurance and admin charges. Use the actual disbursed amount and pure EMI for the truest reading.
Yes - any fixed-rate, equal-installment loan follows the same formula.
APR includes fees and other charges. This tool gives the pure interest rate. Banks publish both - compare apples to apples.
Indian financial products - home loans, fixed deposits, mutual funds, NPS, insurance - each carry their own quirks: monthly reducing balance vs flat-rate interest, quarterly vs monthly compounding, indexation on capital gains, the choice between the old and new tax regime. We design every finance calculator to use the formula that an Indian bank, AMC, or insurer would actually use, and to surface the assumptions in plain English so you can audit the result against your own statement.
Use this calculator alongside the EMI, SIP and inflation calculators to plan your money holistically. A standalone EMI number means little until you compare it with your in-hand salary, your existing debt-to-income ratio, and the impact of inflation on the real cost of the loan. The related-tool grid below makes it one click to chain these analyses together.
The Interest Rate Calculator is part of the Finance suite on Online Calculator Tools, alongside 6 related calculators. All tools share the same UI patterns, the same privacy-first rendering (nothing is sent to a server), and the same commitment to showing the formula and assumptions behind every result.
