Interest Rate Cap Calculator
Price interest rate caps instantly for SOFR, SONIA, EURIBOR and 30+ indices.
Compare costs across tenors and strikes.
Explore our platform
See where the market expects rates to settle over your loan term.
Compare your all-in borrowing cost: cap vs swap vs floating.
See exactly what you pay each period — forward rate, interest cost, cap payout.
Generate a presentation for your credit committee or board.
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FAQs
How do you calculate an interest rate cap?
What is the difference between a cap rate and an interest rate cap?
How much does a 5-year SOFR cap cost?
Can I cap just part of my loan term?
What is a breakeven rate on a cap?
What is an interest rate collar?
Interest rate cap vs swap — which should I choose?
What is an Interest Rate Cap?
An interest rate cap is a derivative contract that protects floating-rate borrowers from rising interest rates. The borrower pays an upfront premium; in return, whenever the reference rate (e.g. SOFR) exceeds the agreed strike rate, the cap seller pays the difference.
Think of it as insurance for your loan — you pay a known premium upfront in exchange for a ceiling on your borrowing cost. Unlike a swap, which locks you into a fixed rate, a cap lets you benefit when rates fall while protecting you if rates rise.
A cap is actually a series of individual options called "caplets", one for each reset period of your loan. Each caplet covers one interest period and pays out if the rate on that reset date exceeds the strike.
How Much Does an Interest Rate Cap Cost?
Cap pricing is driven by five factors:
Tenor
Longer protection = more caplets = higher cost
Strike rate
Lower strike = more likely to pay out = more expensive
Forward rates
If the market expects rates to be near/above the strike, the cap costs more
Volatility
Higher uncertainty about future rates increases the value of the option
Notional amount
Cost scales linearly with the loan size
Use the calculator above to compare prices across different tenors and strikes. A borrower doesn't have to hedge the full loan term — a 10-year loan might only need 3 years of rate protection if refinancing is expected.
Interest Rate Cap vs Swap
What is a SOFR Cap?
A SOFR cap is an interest rate cap where the reference rate is SOFR (Secured Overnight Financing Rate). Since the LIBOR transition, SOFR has become the standard benchmark for USD floating-rate loans. A SOFR cap protects against SOFR rising above the strike rate.
BlueGamma supports caps on SOFR, SONIA (GBP), EURIBOR (EUR), CORRA (CAD), BBSW (AUD), and 30+ other indices globally.
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