1. What is RBC Prime Rate?

The RBC Prime Rate is the benchmark interest rate that Royal Bank of Canada uses to set interest rates for variable-rate loans and lines of credit. It serves as a reference point for many consumer and business lending products.

2. How Does the Calculator Work?

The calculator uses the current RBC Prime Rate and your specific loan parameters:

Where:

• \( P \) — Loan principal amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

Explanation: The calculator determines your actual interest rate by adding your spread to the current prime rate, then calculates the amortized monthly payment.

3. Importance of Prime Rate Calculation

Details: Understanding how the prime rate affects your borrowing costs is crucial for financial planning, especially for variable-rate loans that fluctuate with changes in the prime rate.

4. Using the Calculator

Tips: Enter your loan amount, the interest spread over prime that applies to your loan, and the loan term in years. The calculator will show your effective interest rate and payment details.

5. Frequently Asked Questions (FAQ)

Q1: What is the current RBC Prime Rate?
A: As of October 21, 2025, the RBC Prime Rate is 4.70%. This rate is subject to change based on Bank of Canada policy decisions.

Q2: How often does the prime rate change?
A: The prime rate typically changes when the Bank of Canada adjusts its key policy interest rate, usually during scheduled announcement dates.

Q3: What is a typical spread over prime?
A: Spreads vary by loan type and borrower creditworthiness, typically ranging from 0% to 3% or more above prime.

Q4: Are all RBC loans tied to prime rate?
A: No, only variable-rate products. Fixed-rate loans have set interest rates for the entire term.

Q5: How does prime rate affect my existing loans?
A: Changes in prime rate immediately affect the interest rate and payments on variable-rate loans and lines of credit.