Simple Interest Calculator

Simple interest is the oldest and plainest way to price borrowed money: a fixed percentage of the original amount for every year the money is out. It still turns up in short personal loans, some car and consumer loans, treasury bills, bonds that pay a fixed coupon and many school-level exercises. This page works the formula in four directions, so that whichever of the four quantities you do not know, you can find it.

The formula

Simple interest is the principal multiplied by the yearly rate and by the time in years: interest = P × r × t, with the rate written as a decimal, or the product divided by 100 when it is a percentage. The total amount you repay or receive is the principal plus the interest. Because the interest is always worked out on the original principal, it never grows on itself, and the interest earned in the tenth year is the same as in the first.

Choosing what to find

The Find menu offers four modes. Interest and total amount needs the principal, rate and time. Interest rate needs the principal, the interest earned and the time. Time needs the principal, the rate and the interest. Principal needs the interest, the rate and the time. The fields that are not needed are hidden, and the defaults on the page are consistent with each other, so switching modes shows the same 12,000 of interest from a different angle.

A worked example

With the sample values, a principal of 50,000 at 8% for 3 years earns 12,000 of interest and the total amount is 62,000. The page also shows 4,000 of interest a year and 333.33 a month. Switch to Find the rate, keep 50,000, a time of 3 years and 12,000 of interest, and the answer is 8.00% a year. The table underneath compares this with yearly compounding: after year two the compound total is 58,320 against 58,000, and after year three it is 62,985.60 against 62,000, so compounding is ahead by 985.60.

Years, months and days

Choose the unit that matches your agreement. Months are divided by 12, and days by 365, so 90 days is 0.2466 of a year. For a 90-day loan of 2,00,000 at 12% the interest is 5,917.81. Some lenders use a 360-day year, which makes the same loan cost 6,000, and others count the actual days in each month. The agreement states which, so check it before relying on a figure to the last unit.

Simple compared with compound

In the first year simple and compound interest are identical. After that the difference widens, slowly at low rates and short periods and quickly at high rates and long ones. This is why the table shows both: it tells you whether the loan or deposit you are looking at is one where the difference matters. A product that advertises simple interest and one that advertises compounding at the same rate are not equal after the first year.

Edge cases

A rate of zero gives no interest, and solving for time or principal then has no answer, so the page asks for a positive rate. If you solve for time and the answer is fractional, it is shown in years with months and days beside it. Entering a very small principal with a large interest gives an implied rate that may look absurd, which is the page’s way of telling you that the numbers do not belong together.

Limits

The page does not know your lender’s day-count rule, fees or the way a payment schedule is applied. For loans repaid in instalments, interest is normally charged on the reducing balance, so use the loan calculator instead. Nothing you enter leaves your browser.

Related tools

• Compound Interest Calculator shows what happens when the interest itself earns interest.
• Flat vs Reducing Rate Converter turns a simple-interest style quote on an instalment loan into its real rate.
• Loan Calculator works out instalments when the balance falls as you repay.
• CAGR Calculator measures growth between two values over a period.