RATE solves for the interest rate of a loan or investment when you already know the payment, number of periods, and present value.
RATE works backward from a known payment, number of periods, and loan/investment amount to find the interest rate that makes them all consistent.
Useful for figuring out the real interest rate on a loan offer when you only know the monthly payment and the principal.
=RATE(nper, pmt, pv, [fv], [type])| Argument | Description |
|---|---|
| nper required | The total number of payment periods. |
| pmt required | The payment made each period (negative, since it leaves your hand). |
| pv required | The present value or loan amount. |
| fv optional | The future value or remaining balance. Defaults to 0. |
| type optional | 0 = payments at end of period (default), 1 = start. |
=RATE(36,-200,5000)A $5,000 loan repaid at $200/month for 36 months implies a monthly rate of about 2.12%.
=RATE(36,-200,5000)*12Multiplying the monthly rate by 12 gives an approximate annual rate, around 25.5% — worth double-checking against APR conventions for precise comparisons.
=RATE(120,-300,,50000)What rate is needed for $300/month over 10 years to reach $50,000, with no starting balance.
If your periods are months, the result is a monthly rate — multiply by 12 (approximately) to compare to an annual rate.
ExcelPro has hands-on RATE exercises built into real job scenarios — free to start.
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