Simple Interest Calculator - Easy Interest Calculator
Calculate simple interest on loans, deposits, and investments instantly. Find interest amount, total value, and monthly returns with our free simple interest calculator. Perfect for personal loans, savings accounts, and short-term investments worldwide.
Amount Breakdown
Monthly & Yearly Returns
How Simple Interest Calculator Works
Calculate simple interest in 3 easy steps:
Enter Principal Amount
Input your initial deposit, loan amount, or investment principal. This is the base amount on which interest is calculated.
Set Interest Rate & Time
Enter annual interest rate (1-25%) and time period (1-30 years). Simple interest remains constant throughout the period.
View Interest Breakdown
See total interest, final amount, and daily/monthly/yearly returns. Plan your finances with complete transparency.
Simple Interest Formula Explained
Example Calculation:
Principal: $5,000 | Rate: 6% | Time: 3 years
SI = (5,000 × 6 × 3) / 100 = 90,000 / 100 = $900
Total Amount = $5,000 + $900 = $5,900 (18% growth)
Simple Interest vs Compound Interest
$5,000 at 6% for 10 years - see the dramatic difference:
Simple Interest
Linear Growth- ✅ Easy to calculate and understand
- ✅ Predictable fixed returns
- ✅ Good for short-term (1-3 years)
- ❌ Lower returns on long-term
- ❌ No compounding benefit
Compound Interest
Exponential Growth- ✅ Higher returns long-term (5+ years)
- ✅ Interest earns interest
- ✅ Wealth multiplies exponentially
- ✅ Best for retirement, savings
- ⚠️ More complex calculation
Key Takeaway: Compound interest earns $954 more (32% higher) than simple interest over 10 years! For 20+ years, compound returns can be 2-3x higher. Use simple interest for short-term loans; compound for long-term investments.
When to Use Simple Interest
Auto Loans
Most car loans use simple interest calculation. Pay less total interest compared to compound. Good for 3-5 year vehicle financing.
Personal Loans
Many short-term personal loans (1-3 years) use simple interest. Easier to calculate exact payoff amounts and total cost.
Business Loans
Small business loans and merchant cash advances often use simple interest for transparency and predictable payments.
Short-Term Deposits
Certificate of deposits (CDs) under 1 year, money market accounts, and some savings accounts use simple interest calculation.
Government Bonds
Many treasury bonds, municipal bonds, and government securities pay simple interest (fixed annual coupon payments).
Education Planning
Quick calculation for short-term education funds, tuition savings, or loan interest estimation before detailed planning.
Why Use Our Simple Interest Calculator?
Instant Calculation
Calculate simple interest in seconds. No complex formulas or manual math needed. Get accurate results instantly.
Complete Breakdown
View principal, interest, total amount, plus daily/monthly/yearly returns. Understand exactly where your money goes.
100% Accurate
Uses standard SI = (P × R × T) / 100 formula. Results match bank calculations exactly. Verified accuracy.
Multi-Currency
Calculate in USD, EUR, GBP, INR, AED. Perfect for international loans, deposits, and cross-border investments.
Compare Scenarios
Try different rates, amounts, and time periods instantly. Find the best loan or investment option for your needs.
Mobile Friendly
Calculate simple interest on any device. Plan finances on-the-go, at the bank, or before signing loan agreements.
Frequently Asked Questions
What is simple interest?
Simple interest is interest calculated only on the principal amount, not on accumulated interest. Formula: SI = (P × R × T) / 100. Example: $1,000 at 5% for 2 years = (1000 × 5 × 2) / 100 = $100 interest. Total = $1,100. Interest stays constant each year.
How to calculate simple interest?
Formula: SI = (Principal × Rate × Time) / 100. Steps: (1) Multiply principal by interest rate, (2) Multiply by time in years, (3) Divide by 100. Example: $5,000 × 6% × 3 years = $5,000 × 6 × 3 = 90,000 / 100 = $900 interest.
What is the difference between simple and compound interest?
Simple Interest: Calculated only on principal. Linear growth. Example: $1,000 at 10% for 5 years = $500 interest. Compound Interest: Calculated on principal + accumulated interest. Exponential growth. Same example = $610.51 interest (22% more!). Use simple for short-term, compound for long-term wealth.
Which loans use simple interest?
Auto loans, many personal loans, some business loans, short-term consumer financing, and certain installment loans use simple interest. Benefits: easier to understand, predictable payments, lower total interest than compound. Always verify with lender as loan structures vary.
How much interest on $10,000 at 5% for 2 years?
Calculation: SI = (10,000 × 5 × 2) / 100 = 100,000 / 100 = $1,000 interest. Total amount = $10,000 + $1,000 = $11,000. Monthly interest = $1,000 / 24 months = $41.67/month. Yearly interest = $500/year. This is simple interest - compound would earn slightly more.
Is simple interest better than compound?
For borrowing: Simple interest is better (you pay less). For investing: Compound interest is better (you earn more). Short-term (1-3 years): Difference is small, simple is fine. Long-term (10+ years): Compound wins massively - can earn 30-50% more. Choose based on whether you're borrowing or investing.
Can I calculate simple interest for months?
Yes! Convert months to years: Time in years = Months / 12. Example for 6 months: SI = (P × R × 0.5) / 100. For $2,000 at 8% for 6 months: (2000 × 8 × 0.5) / 100 = $80 interest. For days: Time = Days / 365. Most loans specify annual rate, convert time accordingly.
What investments use simple interest?
Short-term CDs (under 1 year), some money market accounts, treasury bills, commercial paper, certain bonds (coupon payments), and peer-to-peer lending platforms. However, most long-term investments (stocks, mutual funds, retirement accounts) use compound growth for maximum returns.