Simple Interest Calculator
Calculate interest the straightforward way — charged only on the original principal. Enter the principal, annual rate and time period to get the interest and the total amount due.
How to use this calculator
- Enter the principal — the amount lent, borrowed or deposited.
- Enter the annual rate as a percentage.
- Enter the time in years (use 0.5 for six months, 0.25 for three months).
- Press Calculate to see the interest and the total repayable amount.
Formula used
Where P is the principal, R is the annual rate in percent, and T is the time in years. Total amount A = P + SI. Interest never compounds — it's the same every year.
Example calculation
Borrow 50,000 at 7% per year for 3 years:
SI = 50,000 × 7 × 3 ÷ 100 = 10,500. Total amount to repay = 50,000 + 10,500 = 60,500.
What is simple interest?
Simple interest is interest calculated only on the original principal, never on accumulated interest. If you lend 50,000 at 7%, you earn exactly 3,500 every year, whether it's year one or year ten — the interest grows in a straight line.
It's commonly used for short-term personal loans, informal lending, car loans in some markets, and many government schemes. For anything long-term, compound interest almost always applies instead, which is why the same rate produces very different totals under each method.
Why use this calculator?
- Instantly settle informal lending math — loans between friends and family are usually simple interest.
- Verify interest charged on short-term loans and deposits.
- Compare against the compound interest calculator to see exactly what compounding adds.
Frequently asked questions
How do you calculate simple interest for months instead of years?
Convert months to years by dividing by 12. For 8 months, T = 8/12 = 0.667 years. For example, 50,000 at 7% for 8 months = 50,000 × 7 × 0.667 ÷ 100 ≈ 2,333.
What is the difference between simple interest and compound interest?
Simple interest is charged on the principal only and grows linearly. Compound interest is charged on principal plus accumulated interest and grows exponentially. Over 3 years at 7%, the difference is small; over 20 years it's enormous.
Which loans use simple interest?
Short-term personal loans, many auto loans, some student loans and most informal lending use simple interest. Mortgages, credit cards and long-term deposits almost always use compound (reducing-balance) methods.
How do I find the rate if I know the interest?
Rearrange the formula: R = (SI × 100) / (P × T). If you paid 10,500 interest on 50,000 over 3 years, the rate was (10,500 × 100)/(50,000 × 3) = 7%.