Simple Interest Calculator
Calculate simple interest earned or owed over a period.
%
years
- 1
Rate as decimal
5 % ÷ 100 = 0.05 - 2
Annual interest
10,000 × 0.05 = 500 - 3
Interest earned
500 × 3 = 1,500Simple interest is always calculated on the original principal, never on accumulated interest.
Formula
How this is calculated
The calculator takes three inputs: the principal P (the original sum borrowed or invested), the annual interest rate R as a percentage, and the time T in years. The rate is entered per year, so a 5% rate means R = 5 in the formula.
It applies the simple-interest formula Interest = P × R × T ÷ 100. Dividing by 100 converts the percentage rate to a decimal, and multiplying by T scales it across the whole period. Crucially, the rate is always applied to the original principal only — interest is not added back to the balance, so it never earns interest on itself. The total amount is then P + Interest. The donut chart splits that total into its principal and interest parts.
All values use the currency you enter, and T should match the rate period (years here). The model assumes a fixed rate, no extra deposits, withdrawals or repayments, and excludes compounding, taxes, fees and inflation. For partial years T can be a decimal (e.g. 1.5), and a 0% rate or zero term correctly yields no interest.
Examples
| Input | Result |
|---|---|
| Principal $1,000, rate 5%, time 3 years | Interest $150.00; total amount $1,150.00 |
| Principal $20,000, rate 7.5%, time 4 years | Interest $6,000.00; total amount $26,000.00 |
| Principal $5,000, rate 6%, time 2 years | Interest $600.00; total amount $5,600.00 |
About this calculator
A simple interest calculator finds the interest earned or owed on a principal amount when the interest is calculated only on that original sum. Simple interest does not compound, making it common for short-term loans, car loans in some regions, certificates, and many everyday lending situations where interest accrues at a steady, predictable rate.
The formula is I = P × R × T ÷ 100, where I is the interest, P is the principal, R is the annual interest rate as a percentage, and T is the time in years. The total amount repayable is simply the principal plus the interest, P + I. Because the rate always applies to the original principal, the interest added each year is identical and growth is perfectly linear.
To use the calculator, enter the principal, the annual interest rate, and the time period in years (fractions of a year are fine for shorter terms). The tool returns the simple interest and the total amount. Change any value to see how a higher rate or longer term increases the interest in a direct, proportional way.
Interpret the interest figure as the flat cost of borrowing or the flat return on saving, and the total as what you repay or receive at the end. Because there is no compounding, doubling the time exactly doubles the interest, and doubling the rate does the same. This predictability makes simple interest easy to compare across offers.
A common mistake is confusing simple and compound interest; over long periods compound interest yields far more, so simple interest usually favors the borrower. Make sure your time and rate use the same unit, both annual, and convert months to a fraction of a year (for example, 6 months is 0.5 years) before calculating.
Frequently asked questions
Simple interest is common for short-term loans, many auto loans, some personal loans, and certain bonds or savings products. It is favored when terms are short or when a straightforward, fixed interest charge is preferred over a compounding balance that grows on itself.
Convert months into a fraction of a year, since the formula uses time in years. Six months is 0.5 years, three months is 0.25 years, and 18 months is 1.5 years. Enter that decimal so the interest is scaled correctly.
Because interest is charged only on the original principal and never on accumulated interest, the total stays lower than a compounding loan of the same rate and term. The longer the term, the bigger the savings compared with compound interest.
No, it grows in a straight line. Each year adds the same fixed interest amount because the rate always applies to the original principal. This contrasts with compound interest, where the yearly addition increases as the balance grows.
Yes, the formula rearranges easily. To find the rate, use R = (I × 100) ÷ (P × T); to find the principal, use P = (I × 100) ÷ (R × T). Just keep time in years and the rate as a percentage.
Also known as
TG we-Calculate Editorial Team. (2026). Simple Interest Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/simple-interest-calculator
TG we-Calculate Editorial Team. "Simple Interest Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/simple-interest-calculator.
TG we-Calculate Editorial Team, "Simple Interest Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/simple-interest-calculator
@misc{wecalculate_simple_interest_calculator, title = {Simple Interest Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/simple-interest-calculator}}, year = {2026}, note = {TG we-Calculate} }
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