Simple interest is calculated only on the principal: Interest = P × r × t. Useful for short-term loans and notes.
How the Simple Interest Calculator works
Simple interest is charged only on the original principal: Interest = Principal × Rate × Time. Unlike compound interest, it never earns interest on interest.
Example calculation
$10,000 at 5% for 3 years earns $1,500 in simple interest, for a $11,500 total.
Tips for using the Simple Interest Calculator
- Used for many short-term and auto loans.
- Always cheaper for borrowers than compound interest.
- For savings growth, use the compound interest calculator instead.
Simple Interest Calculator — frequently asked questions
- Simple vs compound?
- Simple interest ignores past interest; compound interest earns interest on interest, growing faster.
- Where is it used?
- Car loans, short-term personal loans and some bonds use simple interest.
- Where is simple interest used?
- Short-term personal loans, some car loans and certain bonds and notes.
- Simple vs compound — which grows more?
- Compound always grows faster because it earns interest on accumulated interest.
Related calculators
Compound Interest Calculator · Savings Calculator · CD Calculator · APY Calculator · Investment Calculator · SIP Calculator