How to Find an Interest Rate with RATE in Excel

Uncover the real APR hidden inside a car dealer’s monthly payment quote, including a balloon-payment offer.

You will learn to

• Find the periodic rate behind a payment
• Convert a monthly rate into an APR
• Handle a balloon payment with the fv argument

How it works

RATE(nper, pmt, pv, [fv]) finds the interest rate per period that links a loan amount, a payment and a term. For a $28,500 car loan at $549 a month for 60 months, =RATE(60,-549,28500) returns the monthly rate; multiply by 12 for the APR.

The payment and the loan must have opposite signs: you receive the loan (positive) and pay the instalments (negative). For a balloon loan, enter the final lump sum as a negative fv. RATE iterates, so tiny rounding differences are normal.

=RATE(B4,-B3,B2)*12