Simple Interest Calculator – Interest Formula
Calculate simple interest, total repayment amount, and compare to compound interest for any principal, rate, and time.
📊 Finance📐 I = P × r × t | A = P + I
Principal ($)
Annual rate (%)
Time (years)
Please enter valid values.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Simple Interest Calculator – Interest Formula | I = P × r × t | A = P + I | $ interest |
Step-by-Step Examples
Example 1
$10K, 5%, 3yr
$10,000 at 5%, 3 years.
- I = $10K × 0.05 × 3 = $1,500 | Total = $11,500
✓ $1,500 interest
Example 2
Car Loan $15K, 6%, 4yr
$15,000 at 6%, 4 years.
- Interest = $3,600 | Total = $18,600
✓ $3,600 interest
Example 3
Savings $5K, 4%, 1yr
$5,000 at 4%, 1 year.
- Interest = $200 | Total = $5,200
✓ $200 interest
Real-World Applications
Students
Understand the basic interest formula.
Borrowers
Calculate short-term loan interest.
Lenders
Quick interest calculation for any loan.
Savers
Calculate returns on savings products.
Common Mistakes to Avoid
⚠️
Simple interest is rare long-term
Most loans use compound interest. Simple interest is mainly for short-term loans and some bonds.
⚠️
Rate and time mismatch
Match units: 6% annual rate for 18 months = 6% × 1.5 years, not 6% × 18.
Frequently Asked Questions
Simple vs compound? ▾
Simple: interest only on principal. Compound: interest on interest too. For savings, compound wins. For loans, simple is cheaper.
When is simple interest used? ▾
Car loans, some personal loans, short-term business loans, some government bonds.
Monthly simple interest rate? ▾
Divide annual rate by 12. 12% annual = 1%/month. $10K × 1% = $100/month interest.