Simple Interest Calculator
Calculate simple interest on loans, savings, and short-term investments.
What to Calculate
Loan/Investment Details
Simple Interest Formula
Interest = Principal × Rate × Time
I = P × R × T
- I = Interest earned/paid
- P = Principal (initial amount)
- R = Annual interest rate (as decimal)
- T = Time (in years)
Interest Earned/Paid
Simple interest amount
Total Amount
Principal + Interest
Effective Annual Rate
Yearly return rate
Daily Interest
Per day
How it works
Simple interest is charged only on the original principal — it never compounds. That makes it linear: the interest each year is the same, so total interest just scales with the rate and the time. It's common for short-term loans and some bonds.
Simple interest
I = P · r · t Total = P + I
- I
- interest earned or owed
- P
- principal (starting amount)
- r
- annual rate (decimal)
- t
- time in years
Worked example
- Principal P = $1,000
- Rate = 5% per year
- Time = 3 years
- I = 1,000 × 0.05 × 3
Interest = $150, total = $1,150.
Good to know
- Unlike compound interest, simple interest ignores interest-on-interest — so over long periods it earns far less than a compounding account.
- For a partial year, express the time as a fraction (6 months = 0.5).
- Many car loans and short-term personal loans quote simple interest.
Related Calculators
Frequently Asked Questions
What is the simple interest formula?
I = P x r x t, where P is principal, r the annual rate as a decimal, and t the time in years. The total repaid is A = P(1 + rt). Interest accrues only on the original principal.
How is simple interest different from compound interest?
Simple interest is charged only on the principal; compound interest also accrues on previously earned interest. Over short terms they're close, but over many years compounding grows dramatically faster.
Where is simple interest actually used?
Most auto loans and many personal loans accrue daily simple interest, and it also appears in short-term lending, late-payment charges, and some bond accrued-interest calculations.
How do I solve for the rate or the time instead?
Rearrange the formula: r = I / (P x t) and t = I / (P x r). If $5,000 earned $900 over 3 years, the rate was 900 / (5000 x 3) = 6%.
Can you show a quick simple interest example?
Borrow $5,000 at 6% simple interest for 3 years: I = 5000 x 0.06 x 3 = $900, so you repay $5,900 total. Note that t uses years — 9 months would be t = 0.75.