Simple interest calculator
Calculate simple interest where interest applies only to the original principal — not on accumulated interest. Formula: I = P × r × t (Principal × rate × time). Common in short-term loans, some bonds, and math textbook problems. Contrast with compound interest for savings accounts.
Principal
Annual interest rate (%)
Years
Result
Interest: 1500
Total: 11500
How to calculate simple interest
1. Enter principal P (initial amount).
2. Enter annual interest rate r as a percent (e.g. 5 for 5%).
3. Enter time t in years (convert months: 6 mo = 0.5 yr).
4. Read interest I and total amount P + I.
Simple interest examples
Basic loan
P = $10,000, r = 6%/yr, t = 3 years → I = 10,000 × 0.06 × 3 = $1,800. Total owed $11,800.
Short-term note
P = $5,000, r = 8%, t = 9 months (0.75 yr) → I = 5,000 × 0.08 × 0.75 = $300.
Compare rates
Same P and t, 5% simple vs 5% compounded — simple pays less interest over multi-year periods.
When to use simple interest
• When you solve textbook finance problems specifying simple interest.
• When you estimate some private short-term loans disclosed as flat simple rates.
• When you compare against compound growth to illustrate compounding effect.
When to choose something else
• When interest compounds monthly or daily — use compound interest calculator.
• When you amortize a mortgage with declining balance — use loan amortization tools.
• When fees, taxes, and APR differ from nominal rate — read loan disclosures.
When lenders use simple interest
Some car notes and student promissory notes describe simple interest on declining balance separately from pure I=Prt on fixed principal. Read whether "simple" means formula or "non-compounded" application method.
Teaching compound vs simple
At 10% for 10 years on $1000: simple earns $1000 interest total; compounded annually earns $1593.74. The gap widens with time — why savings products compound.
Frequently asked questions
What is the simple interest formula?
I = P × r × t. r is decimal rate per year; t is time in years.
How do I enter monthly time?
Divide months by 12: 18 months = 1.5 years.
Simple vs compound?
Simple: interest only on P. Compound: interest earns interest — grows faster.
Does rate need to be annual?
Formula assumes annual r with t in years. Convert weekly rates carefully.
Can principal change?
Simple interest model assumes fixed P. Partial repayments need schedule tools.
Is data uploaded?
No. Calculations run locally.