Work out simple interest in seconds. Enter the principal amount, the yearly interest rate and the time period, and see the interest earned or payable and the total amount.
1. Enter the principal amount — the money you borrow or invest. 2. Enter the interest rate per year. 3. Enter the time in years and click Calculate Simple Interest.
Simple interest is the easiest kind of interest to understand. It is charged only on the original amount of money, called the principal, and it never changes during the loan or investment. If you borrow 100,000 at 10 percent simple interest for 3 years, you pay 10,000 of interest every year, which is 30,000 in total, and you repay 130,000 altogether. This free simple interest calculator does that maths for you in one click, and it also shows how much interest you pay each year and each month, so you can plan your budget easily.
Simple interest is still used for many short-term loans, car loans, personal loans from family or friends, and some fixed deposits and savings schemes. It is different from compound interest, where interest is charged on the interest as well, so the amount grows faster. For short periods the difference is small, but over many years compound interest grows much bigger. Use this calculator when the interest is simple, and use our compound interest calculator when the interest compounds.
Suppose you lend 50,000 to a friend at 8 percent simple interest per year for 2 years. The interest is 50,000 times 8 times 2, divided by 100, which is 8,000. Your friend returns 58,000 in total: the 50,000 principal plus 8,000 interest. The interest per year is 4,000 and per month it is about 333.33. Try it in the calculator above: enter 50,000, 8 and 2, and check that your result matches 8,000 interest and 58,000 total.
Now take a bigger loan: 200,000 at 12 percent simple interest for 5 years. The interest is 200,000 times 12 times 5, divided by 100, which is 120,000. The total to repay is 320,000. Notice that the interest alone is more than half of the amount borrowed, because the rate is high and the time is long. If the same loan used compound interest instead, the total would be even higher — about 352,468 — so always check whether your loan uses simple or compound interest before you sign anything.
The formula is: Interest = (Principal times Rate times Time) divided by 100. The rate is the yearly interest rate as a number, for example 10 for 10 percent, and time is in years. If the time is given in months, divide it by 12 first to get years: 6 months is 0.5 years and 18 months is 1.5 years. The total amount is the principal plus the interest. For example, 10,000 at 5 percent for 4 years gives interest of 10,000 times 5 times 4 divided by 100, which is 2,000, and a total of 12,000.
Always use years for time. If your loan is for 18 months, enter 1.5, not 18, or the answer will be twelve times too big. Check whether the rate is yearly or monthly. Most rates are yearly; a monthly rate of 2 percent is the same as 24 percent a year. Compare before you borrow. Try two or three different rates in the calculator to see how much the total changes. Remember fees are extra. Banks may add a processing fee, so the real cost of a loan can be a little more than the interest alone. Use it for savings too. The same formula works for a fixed deposit that pays simple interest.
Entering months instead of years. This is the most common mistake: 18 months must be entered as 1.5 years. Mixing up simple and compound interest. If interest is added to the balance every month, use the compound interest calculator instead. Forgetting to add the principal. The interest is only part of what you repay; the total is principal plus interest. Using the wrong rate. A rate quoted per month must be multiplied by 12 before you use it here. Rounding too early. Keep full numbers while you calculate and round only the final answer.
Pro Tip: To find the interest for one year quickly, just take the rate percent of the principal: 10 percent of 100,000 is 10,000 per year.
Note: This calculator uses simple interest only. If your bank adds interest to the balance (compounding), the real amount will be higher.
What is simple interest? Simple interest is interest charged only on the original principal amount. It stays the same every year, unlike compound interest, which is charged on the principal plus the interest already earned.
What is the simple interest formula? Interest = (Principal x Rate x Time) / 100. Rate is the yearly rate as a number, and time is in years. Total amount = Principal + Interest.
How do I calculate simple interest for months? Convert months into years first by dividing by 12. For example, 9 months is 0.75 years. Then use the normal formula with that time value.
What is the difference between simple and compound interest? Simple interest is always calculated on the original amount, so it grows in a straight line. Compound interest is calculated on the growing balance, so it grows faster and faster over time.
Is simple interest better for the borrower or the lender? Simple interest is usually better for the borrower, because the total interest is lower than compound interest over the same period. That is why many short-term loans use simple interest.
Can I use this calculator for a fixed deposit? Yes, if the deposit pays simple interest. Enter the deposit amount as the principal, the deposit rate, and the number of years to see your interest and maturity amount.
What if the interest rate changes during the loan? This calculator assumes one fixed rate. If the rate changes, calculate each period separately and add the results together.
Does simple interest include bank fees? No. Processing fees, insurance and taxes are not included. Ask your bank for the full cost, including all fees, before you borrow.
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