Simple Interest Calculator

Simple interest is charged only on the original principal, never on accumulated interest. It is used for short-term personal loans, some car finance, treasury bills, and almost every maths homework question on the topic. This calculator returns the interest and the total amount due.

How to use it

1. Enter the principal — the original amount borrowed or invested.
2. Enter the annual interest rate as a percentage.
3. Enter the time period in years; use decimals for part-years, so six months is 0.5.
4. Read the interest earned and the total repayment amount.

Frequently asked questions

When is simple interest used instead of compound interest?

Short-term instruments: many car loans, bridging finance, treasury bills, and instalment plans quote simple interest because the term is too short for compounding to matter much.

How do I enter months instead of years?

Divide the months by 12. Nine months is 0.75 years, 18 months is 1.5 years.

Is simple interest always cheaper than compound?

For the same nominal rate and term, yes. Compound interest charges interest on interest, so it always produces a larger figure over more than one compounding period.

Can I use this for a savings account?

Only if the account genuinely pays simple interest, which is rare. Most savings accounts compound, so use the compound interest calculator instead.

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