Simple Interest Calculator
Calculate simple interest on loans and investments with the basic interest formula.
Calculate Simple Interest
About Simple Interest
Simple interest is calculated only on the principal amount, not on accumulated interest. It's used in some loans, bonds, and short-term investments.
Simple Interest Formula
Simple Interest = Principal × Rate × Time
I = P × r × t
Total Amount = Principal + Interest
I = P × r × t
Total Amount = Principal + Interest
Simple vs. Compound Interest
- Simple Interest: Calculated only on principal
- Compound Interest: Calculated on principal + accumulated interest
- Compound interest grows faster over time
- Simple interest grows linearly
Where Simple Interest is Used
- Some personal loans and auto loans
- Short-term promissory notes
- Some certificates of deposit
- Treasury bills and bonds
- Simple interest mortgages (rare)
Example Calculation
- Principal: $10,000
- Rate: 5% per year
- Time: 3 years
- Simple Interest = $10,000 × 0.05 × 3 = $1,500
- Total Amount = $10,000 + $1,500 = $11,500
Applications
- Quick interest calculations for short-term loans
- Understanding basic interest concepts
- Comparing with compound interest scenarios
- Educational purposes and financial literacy