About interest rate calculator
If you know the loan amount, the payment and the tenure, you can work out the interest rate behind it. This is useful for checking an offer that only quotes an EMI.
How it is found
There is no direct formula for the rate, so the tool searches for the rate at which the EMI formula matches your payment.
What to look for
Compare the result with the rate the lender advertised. A big difference often means fees or a flat-rate method are included.
A worked example
A loan of ₹5 lakh repaid with EMIs of ₹16,607 over 36 months implies an interest rate of 12 percent a year. If a lender quotes an EMI that looks low, use this to find the rate hidden behind it, and ask whether fees are included.
Flat versus reducing rate
A flat rate of 8 percent charges interest on the full amount for the entire period, which is roughly equal to a reducing-balance rate of 14 to 15 percent. Always compare reducing-balance rates.
