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Interest Rate Percentage Calculator

Reverse calculate the interest rate when you know the principal, total interest paid, and time period.

Find the annual rate based on total interest cost.

Quick Answer

To find the annual interest rate percentage, use the formula **R = (I / (P × t)) × 100**, where I is the total interest, P is the principal, and t is time in years. This gives you the simple annual rate.

Interest Rate Percentage Calculator

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How It Works

  1. Multiply the Principal amount by the Time (in years).
  2. Divide the Total Interest Amount by the result from step 1.
  3. Multiply by 100 to get the percentage rate.

Formula:

Rate = (Interest / (Principal × Time)) × 100

Simple Interest vs Compound

This tool calculates the rate based on the **Simple Interest** formula ($I = Prt$). For **Compound Interest** (where interest earns interest), the effective rate would be slightly lower for the same total return, because compounding accelerates growth. Use the [Compound Interest Calculator](/calculators/compound-interest-calculator) for long-term investments.

Examples

Example A: Personal Loan

Result: Paid $200 interest on a $1,000 loan over 2 years. 200 / (1000 * 2) = 200/2000 = 0.10 = 10%.

Example B: Investment

Result: Earned $50 on $500 in 1 year. 50 / (500 * 1) = 0.10 = 10%.

Example C: Quick Term

Result: Paid $20 interest on $100 in 0.5 years (6 mo). 20 / (100 * 0.5) = 20/50 = 0.40 = 40%.

Frequently Asked Questions

Is this simple or compound interest?

This calculator solves for the **Simple Annual Rate**. In real-world loans (like mortgages), APR calculations are more complex due to compounding and fees.

How do I convert monthly rate to annual?

If you have a monthly rate, multiply it by 12 to get the nominal annual rate.

Why is the rate so high for payday loans?

Short-term loans often have small fees that look small, but when annualized (multiplied by time), the percentage rate (APR) can exceed 300-400%.

Does this include fees?

If "Total Interest" includes fees, then yes, this gives you the effective cost of borrowing as a percentage.

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