Simple Interest Calculator
Calculate interest charged on the principal only, with no compounding.
What the Simple Interest Calculator does
Simple interest is charged only on the original principal, never on accumulated interest. It is used for short-term loans, some car finance and many bonds — and it always costs less than compound interest over the same period.
Formula
Interest = P × r × t ÷ 100Amount = P + Interest
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Principal | selected currency | Yes | Accepts more than 0. |
| Annual interest rate | % | Yes | — |
| Time period | years | Yes | Accepts more than 0, up to 100. |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Principal, Annual interest rate and Time period.
- Select Calculate.
Worked example
$10,000 at 6% simple interest for 3 years.
- Principal
- 10000
- Rate
- 6
- Years
- 3
Interest = 10,000 × 6 × 3 ÷ 100 = $1,800. Final amount $11,800.
Reading the result
- Interest is charged only on the original principal, so the amount owed grows in a straight line rather than a curve.
- Over a single year simple and compound interest are close; the gap widens sharply with time, which is why long loans are rarely simple-interest.
Assumptions and limitations
- The rate and principal are constant for the whole term, with no repayments reducing the balance along the way.
Common mistakes
- Comparing a simple-interest quote against a compound one without converting both to the same basis.
- Mismatching the rate and the term — an annual rate with a term entered in months overstates the interest twelvefold.
Frequently asked questions
How much less is simple than compound interest?
On the example above, compound interest at 6% would produce $1,910 instead of $1,800. Over long periods the gap widens dramatically.