Simple Interest Calculator
Simple interest and total repaid for any principal, rate and time in years, months or days — with the I = P × r × t working shown and a compound comparison.
Simple Interest Calculator: with the default inputs, simple interest is $150.00.
The amount borrowed or deposited.
- Total (principal + interest)
- $1,150.00
- Time in years
- 3
- Interest if compounded annually
- $157.63For comparison — what the same rate earns with yearly compounding.
- Compounding advantage
- $7.63
Assumptions
- A 365-day year for day counts and 12 equal months.
- Interest accrues on the original principal only; no payments are made during the term.
How this is worked out
The formula
I = P × r × t A = P + I = P × (1 + r·t) P = principal, r = annual rate (decimal), t = time in years Months ÷ 12 and days ÷ 365 convert to years
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Principal
- The amount borrowed or deposited.in dollars · 0 or more · defaults to 1000
- Annual interest rate
- A number.a percentage · from 0 to 1000 · defaults to 5
- Time
- A number.from 0 to 100000 · defaults to 3
- Time unit
- Choose one of 3 options.Years · Months · Days (365-day year)
What you get back
- Simple interestmain answer
- Total (principal + interest)
- Time in years
- Interest if compounded annually
- For comparison — what the same rate earns with yearly compounding.
- Compounding advantage
What this assumes
- A 365-day year for day counts and 12 equal months.
- Interest accrues on the original principal only; no payments are made during the term.
About this calculator
Simple interest is charged only on the original principal — it never compounds. That makes it the easy case: interest equals principal times rate times time. You meet it in short-term personal loans, some auto loans, Treasury bills, bonds' coupon payments, late-payment penalties and most "interest for a few days" situations.
How to use it
Enter the principal, the annual rate and the time. Pick the unit that matches your situation — days for a bridge loan or a late fee, months for a short note, years for anything longer. The calculator converts to years (days ÷ 365, months ÷ 12) and shows the substitution into I = P·r·t. Solve for turns it around: "what rate gives $150 of interest on $1,000 in 3 years?"
Reading the results
- Simple interest is the amount charged or earned over the whole period.
- Total is principal plus interest — what you repay, or what your deposit is worth.
- Interest if compounded annually shows what the same rate produces when interest itself earns interest. For short periods the two are nearly identical; the gap widens with time and rate. That difference is exactly why savings accounts compound and why you should confirm which method a lender uses.
Day-count conventions
Banks don't all agree on the length of a year. Consumer loans in the US usually use 365 days; some commercial loans and money-market instruments use 360, which makes the daily rate about 1.4% higher. This calculator uses 365. If your contract says 360, multiply the result by 365/360.
Simple interest loans with monthly payments
Most US auto loans and mortgages are "simple interest" in the sense that interest accrues daily on the outstanding balance, but because you pay them down every month, the total interest depends on the payment schedule, not on P·r·t. For those, use the loan or amortization calculator; this one is for a single sum outstanding for a fixed period.
Frequently asked questions
▸How do I calculate simple interest?
Multiply principal by the annual rate (as a decimal) by the time in years: $1,000 × 0.05 × 3 = $150. For months divide the month count by 12 first; for days divide by 365.
▸What's the difference between simple and compound interest?
Simple interest is charged only on the original principal. Compound interest is charged on principal plus previously accrued interest, so it grows faster the longer the term.
▸Is a car loan simple interest?
Usually yes — interest accrues daily on the remaining balance. But because you make monthly payments, the total interest comes from the amortization schedule, not from a single P × r × t calculation.
▸Which is better for a borrower, simple or compound?
Simple, always: you never pay interest on interest. For a saver the reverse holds.
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