Reviewed November 2026 · Estimate only, not financial advice.
Simple interest is charged on the original principal only — interest never earns interest of its own. Enter the principal, the annual rate and the time, and see the interest and the total.
How This Simple Interest Calculator Works
Simple interest is calculated only on the original principal. The interest for each year is the same amount, because the balance used for the calculation never grows. That makes it predictable — and usually cheaper than compound interest over long periods.
Interest = P × r × t
P = principal, r = annual rate (as a decimal), t = time in years. Total to repay = P + Interest.
Worked example: $5,000 at 6% simple interest for 3 years. Interest = $5,000 × 0.06 × 3 = $900.00. Total to repay = $5,900.00, with $300 of interest accruing each year.
Practical tips
Simple vs compound: know which you are paying.Most mortgages and personal loans compound monthly, so they cost more than this calculator shows. Simple interest is common on short-term loans, some auto loans and many student loans while in school.
Compare with compound interest.Run the same numbers on the Compound Interest Calculator: the gap between the two answers is the cost of compounding, and it grows fast with time and rate.
Match the time unit to the rate.If the rate is quoted monthly, use months for t and the monthly rate. Mixing an annual rate with months is the most common simple-interest mistake.
Interest is linear here.Doubling the time exactly doubles the interest. That is the signature of simple interest — and the reason long simple-interest loans stay affordable.
Frequently Asked Questions
What is simple interest?
Interest calculated only on the original principal. Each year's interest is the same amount, because interest is never added to the balance and charged again.
How is simple interest different from compound interest?
Simple interest charges interest on the principal only. Compound interest charges interest on the principal plus all interest already earned, so the balance — and the interest — grows faster over time.
Where is simple interest used?
Short-term personal loans, some auto loans, many student loans (while in school), and some savings products. Most mortgages and credit cards compound instead.
What is the formula?
Interest = Principal × Rate × Time. Total to repay = Principal + Interest. Use the rate as a decimal (6% = 0.06) and time in years.
Does paying early save interest?
Yes — with simple interest, interest accrues day by day on the principal. Paying part of the principal early reduces the interest charged from that point on.
Is this financial advice?
No. This is a planning estimate only, not financial advice.
