the real rate is approximately equal to the nominal rate (the interest rate printed on the loan agreement) minus the inflation rate. The idea is that if I lend you $100 for one year at 10% interest, but inflation reduces the real value of the $110 you pay back by 5%, you're "really" paying only 5 percent interest (approximately) and I'm "really" earning only 4 percent since the dollars I get at the end of the year aren't worth as much as those I lent you.
Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html