RATE Function in Excel: The Interest Rate Hidden in a Loan

RATE Function in Excel: The Interest Rate Hidden in a Loan featured illustration

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⏱ 2 min readUpdated 28 September 2026

FinancialLevel: ExpertAvailable in: Excel 2007+

In this article
  1. Syntax
  2. Examples
  3. Example 1
  4. RATE in practice
  5. Where you will use it
  6. Worked example
  7. Mistakes people make
  8. Related functions
  9. Continue learning

RATE works out the interest rate from the loan amount, EMI and term — useful for checking “0% EMI” and flat-rate offers.

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Syntax

=RATE(nper, pmt, pv, [fv], [type], [guess])
Argument What it means
nper Number of payments.
pmt EMI (negative).
pv Amount borrowed.

Examples

Example 1

=RATE(12, -9000, 100000)*12

Real annual rate when ₹1 lakh is repaid as 12 EMIs of ₹9,000 — about 14.4%, not the 8% it may look like.

RATE in practice

Where you will use it

  • Interest rate of a loan from EMI
  • Hidden rate in 'no-cost EMI'
  • Return of a SIP

Worked example

Annual rate hidden in an EMI offer.

MonthsEMILoanFormulaResult
129000100000=TEXT(RATE(A2,-B2,C2)*12,"0.00%")14.45%
244700100000=TEXT(RATE(A3,-B3,C3)*12,"0.00%")11.84%
602125100000=TEXT(RATE(A4,-B4,C4)*12,"0.00%")10.01%

Results calculated in Excel.

Mistakes people make

MistakeWhat to do instead
Monthly vs annualRATE gives per-period; multiply by 12
No solution#NUM!; give a guess

PMT · NPER · EFFECT

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📎 Practice files for this article

  • 📗
    Practice workbook: Financial: EMI, SIP, NPV, IRR, depreciation23 tasks on realistic sales data — type your formula, the Check column turns green when it is right. Answers sheet included.
    ⬇ XLSX · 35 KB

Free to use for learning. Files with macros (.bas) are plain text — import them with Alt+F11 → File → Import File, and always test on a copy.

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