Finance · Popular

Simple Interest Calculator

A simple interest calculator that shows interest earned, total amount payable, and a side-by-side comparison with compound interest so you can see exactly what you gain from compounding.

Principal amount

Annual interest rate (%)

Time period (years)

Simple Interest

—

Total amount

—

Monthly interest

—

Simple vs Compound Interest

Simple Interest —

Compound Interest (annual) —

CI advantage —

Method

How this calculator works

Simple interest is calculated only on the principal, making it predictable and easy to compute. Unlike compound interest, the interest does not itself earn interest.

SI = (P × R × T) / 100

P = Principal amount
R = Annual interest rate (%)
T = Time in years
A = P + SI  (Total amount)

Enter the principal — the amount borrowed or invested.
Enter the annual interest rate as a percentage.
Enter the time period in years (use decimals like 0.5 for 6 months).
The calculator shows simple interest, total amount, and a comparison with compound interest.

Examples

Worked examples

Real numbers, end-to-end results.

$10,000 · 8% · 5 years

SI = $4,000 · Total = $14,000

Basic personal loan scenario.

$50,000 · 12% · 2 years

SI = $12,000 · Total = $62,000

Short-term business loan.

$1,000 · 5% · 6 months

SI = $25 · Total = $1,025

Use 0.5 years for 6 months.

Use cases

When to use it

Calculate interest on short-term personal loans.
Understand what you'll repay on a car loan or overdraft.
Compare SI vs CI to understand the benefit of compound growth.
Check if a lender is using simple or compound interest.

Disclaimer: This calculator provides estimates for informational and educational purposes only. It is not a substitute for professional financial advice, tax planning, or investment guidance. Always consult a qualified financial advisor for decisions affecting your finances. Results depend on the accuracy of inputs provided.

FAQ

Frequently asked questions

What is the simple interest formula?

Simple Interest = (Principal × Rate × Time) / 100. The total amount payable is Principal + Simple Interest.

What is the difference between simple and compound interest?

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus any interest already earned — so it grows faster over time. The difference becomes significant over longer periods.

When is simple interest used?

Simple interest is used for short-term personal loans, car loans (in some regions), treasury bills, and certificates of deposit. It is also the standard for most short-term bank overdrafts.

Is simple interest better or worse?

As a borrower, simple interest loans are better — you pay less. As a lender or investor, compound interest is better — you earn more. Always check which method your bank or lender uses.