How to Calculate Interest Rate from EMI in Excel (with Easy Steps)

We’ll use the RATE function:

=RATE(nper, pmt, pv,[fv], [type], [guess])

Nper(required): total payment periods number (years, months)
Pmt (required): the pre-set payment amounts for each period. It doesn’t vary over the annuity’s lifetime. It generally involves principal and interest but excludes taxes.
Pv (required): the present worth of the loan
Fv (optional): the future worth, or the cash balance you want after the last installment. It defaults to 0 if not specified.
Guess (optional): your best guess as to what the rate may be, if you leave it blank it defaults to 10%.

The generic formula with the RATE function is.

=RATE( periods, -payment, amount)*12

We’ll try to find out the Interest Rate in cell C9.

Payment Periods in Month (nper) is 12 months which is in the C5 cell.
Loan Amount (pv) is 15,000 USD which is in the C6 cell.
EMI is 1,318 USD which is in the C7 cell. We will use the value of EMI to find the interest rate. Values of Payment Periods in Month and Loan Amount will also be used.

Use the formula in the C9 cell like this.

=RATE(C5,C7,C6)*C5

Formula Explanation

RATE(C5,C7,C6) → returns the periodic interest rate.
- Output → 833%
RATE(C5, C7, C6)*12 → returns the actual interest rate found from EMI
- Output →10%

Press Enter to find the Interest Rate as 10%.

Calculation of EMI from Interest Rate

We can use the PMT function when we need to calculate EMI from the interest rate. We want to calculate EMI in cell C9. We have taken the Interest Rate as 10% which is in the C7 cell. Similarly, as before, the Payment Periods in Month is 12, and Loan Amount is 15,000 USD.