Simple Interest Calculator
Calculate simple interest on a principal.
Results update as you type.
This calculator is for illustrative purposes only. Actual rates, fees and terms vary by lender. Consult a qualified financial adviser before making borrowing decisions.
How it works
Simple interest is the charge or earning calculated only on the original principal, never on interest that has already accrued, which makes it the most transparent way to price short-term borrowing and lending. The interest figure shown here is the flat cost of using a sum of money for a set time, and the total is that principal plus the interest you owe or earn. Knowing it matters because many everyday arrangements — a short personal loan, a car loan, a promissory note between individuals, or a fixed-term deposit — use exactly this method, so the number is not an approximation but the real amount. This simple interest calculator multiplies the principal by the annual rate and the length of time, the definition used because interest here is strictly proportional to how much you borrow and for how long, with nothing compounding on top. Lenders, students and anyone settling a small private loan use a simple interest calculator to check a quoted figure, plan repayments, or compare a flat-rate offer against a compounding one. Because it never adds interest onto interest, a simple interest calculator will always show a lower balance than a compounding account at the same rate over the same period, a gap that widens as the term lengthens.
Interest = Principal × Rate × Time ÷ 100
Principal is the sum borrowed or invested, rate is the annual percentage cost, and time is the number of years the money is outstanding. Multiplying the three ties interest directly to size and duration — double the principal or double the time and the interest doubles too. Dividing by 100 converts the rate from a percentage into a decimal. Nothing is compounded, so the principal that earns interest stays fixed throughout the term.
Source:Standard simple interest formula
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter principal, annual rate and time.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Interest updates instantly as you type — no button to press.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is charged only on the original principal, so it accrues at a constant amount each period and grows in a straight line. Compound interest is charged on the principal plus all interest already added, so it accelerates over time. Over a single year the two are nearly identical, but across many years compounding pulls far ahead. Borrowers benefit from simple interest; savers benefit from compounding.
Can the time be a fraction of a year?
Yes. Enter a decimal to represent partial years — 0.5 for six months, 0.25 for a quarter, or 1.5 for eighteen months. Because simple interest is directly proportional to time, halving the period simply halves the interest. This makes the method convenient for short loans and notes measured in months rather than full years, where compounding would add little and complicate the arithmetic.
Where is simple interest actually used?
It appears in many short-term and fixed arrangements: some personal and auto loans, promissory notes between individuals, certain bonds and Treasury instruments, retailer financing, and short bank certificates. Late-payment charges are often simple interest too. It is favored wherever transparency matters and the term is short enough that compounding would make a negligible difference, since a flat, predictable charge is easier for both sides to agree on and verify.
How do I calculate the total repayment?
Add the interest to the original principal. The tool does this for you: it computes principal times rate times time divided by 100 to get the interest, then adds the principal back to show the total amount due at the end of the term. That total is what a borrower repays in full at maturity, or what a fixed-term deposit is worth when it matures, assuming no extra payments along the way.
Does simple interest ever benefit the borrower?
Yes, compared with a compounding loan at the same rate. Because interest never stacks on prior interest, the balance a borrower owes grows more slowly, so the total cost is lower over an identical term. This is why simple-interest financing is attractive for buyers, and why paying such a loan off early is straightforward — you only owe interest for the days the principal was actually outstanding.