Calculate the true cost of borrowing with installment payments
The effective interest rate shows the true cost of borrowing by considering the timing and amount of all cash flows. This rate can be significantly higher than a simple interest rate, especially with regular installment payments. For example, a loan of $3,300 with 10 monthly payments of $363 has an effective annual rate of approximately 33.51%. This calculator uses the Newton-Raphson method for high precision calculations.
This calculator provides estimates for informational purposes only and should not be relied upon for financial planning decisions. Effective interest rate calculations are based on the inputs provided and assume regular payment schedules. Actual loan terms, fees, charges, and conditions may vary significantly between lenders and products. Results do not constitute financial advice or loan pre-approval. Please consult with a qualified financial advisor or directly with lenders for advice specific to your situation and to verify all loan terms before making borrowing decisions.