Calculate simple interest and the total amount based on principal, rate, and time period. Ideal for loans or savings using non-compounding interest.
The Simple Interest Calculator quickly determines the interest earned or owed over a period of time using the standard non-compounding formula. It's ideal for short-term loans, auto financing, U.S. Treasury bills, and any scenario where interest is calculated only on the original principal — not on accumulated interest. For interest that compounds over time, see the Compound Interest Calculator.
I = P × R × T A = P + I = P × (1 + R × T) Where: I = Interest earned or owed A = Final total amount P = Principal (original amount) R = Annual interest rate (decimal, e.g. 5% = 0.05) T = Time in years
You borrow $10,000 at 5% annual interest for 3 years:
Interest = 10,000 × 0.05 × 3 = $1,500 Final Amount = 10,000 + 1,500 = $11,500
The interest accrues at a flat $500/year — it never compounds onto itself.
The same $10,000 at 6% for different time horizons:
| Duration | Simple Interest | Compound (Monthly) | Difference |
|---|---|---|---|
| 1 year | $10,600 | $10,616.78 | $16.78 |
| 5 years | $13,000 | $13,488.50 | $488.50 |
| 10 years | $16,000 | $18,193.97 | $2,193.97 |
| 20 years | $22,000 | $33,102.04 | $11,102.04 |
If your loan is in months, divide by 12 before entering: 6 months = 0.5 years, 9 months = 0.75 years, 18 months = 1.5 years. For example, $5,000 at 8% for 9 months: I = 5,000 × 0.08 × 0.75 = $300.
This calculator provides general educational estimates. Actual loan or savings results may vary depending on compounding frequency, payment timing, and lender-specific terms.
The formula is I = P × R × T, where P is the principal (starting amount), R is the annual interest rate expressed as a decimal (e.g., 5% = 0.05), and T is the time in years. For example, $10,000 at 5% for 3 years: I = 10,000 × 0.05 × 3 = $1,500.
Total Amount = Principal + Interest, or A = P(1 + R × T). For $10,000 at 5% for 3 years: A = $10,000 + $1,500 = $11,500. Unlike compound interest, the total grows in a straight line — the same amount of interest accrues each year.
Simple interest is used in: short-term personal loans, auto loans (in some cases), U.S. Treasury bonds and bills, some student loans (the principal accrues interest daily before repayment begins), and payday or installment loans. It's also the basis for savings account APY calculations over a single period.
Most U.S. auto loans use simple interest. Your daily interest charge is calculated as: (Principal × Annual Rate) ÷ 365. This means making payments early or on time saves money, while late payments increase the interest portion of your next payment. Paying extra toward principal directly reduces your future interest costs.
With simple interest, you always earn/pay interest only on the original principal — the interest never 'earns interest.' With compound interest, interest is added to the balance and future interest is calculated on the new total. Over 10 years, $10,000 at 6%: simple interest → $16,000; compound monthly → $18,193. The gap widens dramatically over longer periods.
Enter time in years. For partial years: 6 months = 0.5, 3 months = 0.25, 18 months = 1.5. For example, a $5,000 loan at 8% for 9 months: I = 5,000 × 0.08 × 0.75 = $300. Always convert months to a decimal fraction of a year before entering.
Simple interest benefits borrowers who pay early — since interest is charged only on the remaining balance, early payments reduce total interest owed. It benefits lenders on long-term investments when compounding would grow much larger returns. For short-term loans under 2 years, the difference between simple and compound is relatively small.
Yes, for basic estimates. However, most real savings accounts compound interest (daily or monthly), which means you'll earn slightly more than simple interest shows. For a more accurate savings projection with compounding, use the Compound Interest Calculator. Simple interest gives you a conservative baseline that's useful for quick comparisons.