If you are looking for **how to calculate interest rate from EMI in Excel** then you are in the right place. In this article, weâ€™ll try to discuss how to calculate interest rates from **EMI**. Mainly, **EMI** is equated to monthly installment. This is the amount that a borrower pays to the lender monthly. The interest rate depends on this **EMI**. There are some other variables on which the interest rate is dependent. However, weâ€™ll discuss here the procedure of finding interest rates from **EMI**.

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## Applying RATE Function to Calculate Interest Rate from EMI in Excel

Excel has limited functions to calculate interest rates from **EMI**. **The RATE function** is the basic function to calculate the interest rate.

Eventually, **the RATE function** is like this.

`=`

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

Here,**Nper**(required): total payment periods number (years, months)**Pmt** (required): the pre-set payment amounts for each period. It doesnâ€™t vary over the annuityâ€™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`

However, weâ€™ll try to find out the Interest Rate in cell **C9**.

Here,**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.

And **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 Amoun**t will also be used.

Firstly, we can write the formula in the **C9** cell like this.

`=RATE(C5,C7,C6)*C5`

Generally,** EMI** is used not annually but monthly.

**Formula Explanation**

**RATE(C5,C7,C6) â†’**returns the periodic interest rate.**Output**â†’**833%**

**RATE(C5, C7, C6)*12 â†’**returns the actual interest rate found from EMI**Output â†’10%**

Secondly, press **ENTER** to find the** Interest Rate** as **10%**.

## Calculation of EMI from Interest Rate

Additionally, we can use **the ****PMT function** when we need to calculate EMI from the interest rate. Suppose, 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**. Firstly, we need to write the following formula in the **C9** cell to calculate **EMI** from the interest rate.

`=PMT(C7/12,C5,-C6)`

Secondly, press** ENTER** to get the output as **1318.74** **USD**.

## Things to Remember

- The
**EMI**has to be taken negatively. In annuity functions cash paid out is represented as a negative number.

## Practice Section

Additionally, for doing practice by yourself we have provided a** Practice** section like below in each sheet on the right side. Please do it by yourself.

## Conclusion

We can calculate Interest Rate from** EMI** and subsequently **EMI** from Interest Rate if we study this article properly Because both of the procedures have been discussed here. Eventually, please feel free to visit our official Excel learning platform **ExcelDemy** if you have further queries.