Monthly Payments to APR Calculator

💳 Want to know the real cost of your loan or financing offer? Here’s how to figure out the APR (Annual Percentage Rate) — even if all you’re given is the monthly payment.

When lenders advertise low monthly payments, it can be tempting to sign on the dotted line. But what you really need to know is the APR — the Annual Percentage Rate — because that tells you the true cost of borrowing money.

Let’s walk through how to calculate APR if all you have is the monthly payment, loan amount, and loan term. In this post we also provide an APR calculator to make things easy for you.

🙋 What Is APR?

APR (Annual Percentage Rate) is the true yearly cost of borrowing, including:

  • Interest
  • Fees
  • And how frequently you make payments

It gives you the big picture, and makes it easier to compare different loans, even if the monthly payments look similar.

🧮 The Inputs You’ll Need

To calculate APR from monthly payments, you’ll need:

  • Loan amount (the amount you borrowed)
  • Monthly payment (what you’re paying each month)
  • Loan term (number of months)
  • An APR calculator or spreadsheet (because solving it by hand is very complex — it involves iterating over interest rates)

💡 Formula

APR is calculated using this financial formula:

P = r × L/[1−(1+r)−n]

Where:

  • P = monthly payment
  • L = loan amount (principal)
  • r = monthly interest rate (APR ÷ 12)
  • n = number of payments (months)

To get the APR, you’d rearrange this formula to solve for r, then multiply it by 12 to get the annual rate. But since this equation is tricky to reverse, we normally use the Calculator below or Excel’s RATE function to find it.

⚙️ Monthly Payments to APR Calculator

📋 Example

Let’s say:

  • You borrow $10,000
  • You pay $200 per month
  • The loan lasts 60 months

Plug that into the calculator above or a spreadsheet:

RATE(60, -200, 10000) × 12 = 7.4%

✅ The APR is about 7.4%

Tip: Use Excel or Google Sheets: =RATE(n, -payment, loan_amount) * 12

🧮 Why This Is Useful

You’ll want to calculate APR from monthly payments when:

  • A dealer gives you a monthly-only offer
  • You’re comparing loan or lease options
  • You want to know if a “0% interest” deal is actually zero

✅ Quick Tips

  • If APR isn’t shown, assume the deal might be hiding fees
  • Use a calculator or spreadsheet to do the heavy lifting
  • Always compare total cost over time — not just monthly payments
  • Ask for a full loan amortization schedule if unsure

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