Simple Interest Calculator
Enter the principal, annual interest rate, and number of years to see how much interest accrues and the total at the end. Uses the simple interest formula — interest on the original principal only, with no compounding. This tends to underestimate the cost of most real-world loans, which compound monthly, but it's accurate for short-term loans, some bonds, and quick estimates. For loans with monthly repayments, the loan payment calculator applies the compound formula used by most lenders.
When to use this calculator
Use this for a quick interest estimate, for short-term personal or informal loans, for fixed-rate savings bonds that pay simple interest, or when doing coursework that specifically requires the simple interest formula.
Interest Earned
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Total Amount
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Results are instant — nothing is stored and no account is needed.
Related Calculators
How to Calculate
- Enter the principal — the starting amount of money.
- Enter the annual interest rate as a percentage.
- Enter the time period in years.
- Interest earned and total amount appear instantly.
Formula
Multiply the principal by the annual rate percentage and the number of years, then divide by 100. Add the interest to the principal to get the total amount.
Examples
Principal $2,000, Rate 5%, Time 4 years
$400 interest — $2,400 total
Principal $500, Rate 8%, Time 2 years
$80 interest — $580 total
Principal $15,000, Rate 3%, Time 10 years
$4,500 interest — $19,500 total
Use Cases
- Estimating interest on a short-term personal loan
- Calculating returns on a fixed-rate savings bond
- Understanding the basic cost of borrowing before applying
- Comparing different rate and term combinations quickly
- Finance coursework and exam preparation
FAQ
What is simple interest?
Simple interest is calculated only on the principal — not on previously accumulated interest. It grows linearly: $1,000 at 5% for 3 years earns the same $50/year each year, totalling $150.
How much interest on $5,000 at 4% for 3 years?
Simple interest = $5,000 × 4% × 3 = $600. Total amount = $5,600.
How much interest on $10,000 at 6% for 5 years?
Simple interest = $10,000 × 6% × 5 = $3,000. Total = $13,000.
What is the simple interest formula?
Interest = Principal × Rate × Time / 100. For example, $2,000 at 5% for 4 years: $2,000 × 5 × 4 / 100 = $400 interest.
What is the difference between simple and compound interest?
Simple interest is calculated on the principal only. Compound interest is calculated on the principal plus any previously earned interest — so interest earns interest. Over time, compound interest produces significantly higher returns or costs.
When is simple interest used?
Simple interest applies to many short-term personal loans, car loans, and basic bonds. Most savings accounts and mortgages use compound interest. If you're evaluating a loan, the loan payment calculator uses the compound formula to give you the actual monthly payment.