Simple Interest Calculator
Calculate simple interest on a loan or deposit. Returns interest amount, total, and effective rate.
What this calculates
Simple interest is calculated only on the original principal — no interest-on-interest. It's used in many car loans, short-term personal loans, and some bonds. The math is straightforward and easy to verify by hand, which is why it's still common despite compound interest being more common for savings.
Formula & how it works
Simple interest = principal × rate × time. Where rate is the annual rate as a decimal and time is years. Total amount = principal + interest. For shorter periods, time is fraction of a year (e.g., 90 days = 90/365 ≈ 0.247).
Worked example
$10,000 deposit at 5 % simple interest for 3 years. Interest = 10 000 × 0.05 × 3 = $1,500. Total = $11,500. Compare to compound interest at the same 5 %: total would be $11,576 — the gap grows fast with longer periods.
Frequently asked questions
When is simple interest used?
Auto loans (in some structures), short-term personal loans, some bonds, and easy verifications. Most savings accounts and long-term loans use compound interest instead.
How does it differ from compound?
Simple: interest only on principal. Compound: interest also on accumulated interest. Over 30 years at 7 %, $10K grows to $31K simple but $76K compound.
Is simple interest better for borrowers?
Yes. Same rate, less total interest paid. Most loans you'll encounter compound, though — simple-interest loans are rarer and worth asking about.
How do I calculate for partial years?
Time = days/365. For 6 months: 0.5. For 90 days: 0.247. The formula works the same — just use the fractional time.
Related calculators
- Compound InterestSee how money grows over time with compounding. Enter principal, rate, time, and optional monthly contributions to project future value.
- Loan CalculatorCalculate monthly payment, total interest, and total cost for any fixed-rate loan. Works for personal, auto, student, and small-business loans.