Simple Interest Calculator
Calculate simple interest and total repayment for loans that do not compound.
About this tool
Simple interest is calculated only on the original principal: interest equals principal times rate times time. It appears in short term personal loans, auto loans in some markets, bonds, and most classroom math, and it is the baseline against which compound interest is understood.
Because the interest never joins the principal, the cost grows in a straight line rather than a curve. Over short periods the difference from compounding is small; over decades it is enormous, which you can see by comparing this result with the compound interest calculator on this site using the same inputs.
Frequently asked questions
What is the simple interest formula?
I = P times r times t, where P is principal, r is the annual rate as a decimal, and t is time in years. The total repaid is principal plus interest.
Do banks use simple or compound interest?
Savings accounts and credit cards compound. Some auto and short term loans use simple interest calculated on the remaining balance. Check the loan agreement.