Simple Interest Calculator
Simple interest is the flat-rent version of money growth: interest = principal × rate × time, always computed on the original principal, never on accumulated interest. It is how most car loans, short-term notes and textbook problems work — and the formula fits on one line, which is exactly why it belongs in every financial toolkit.
The third stat answers the question every learner eventually asks: "what would compounding have done instead?" The calculator runs the same principal at the same rate compounded monthly and shows the difference in dollars. When the gap matters, head to the compound interest calculator; when you have a target date instead of a fixed term, the savings goal calculator works backwards from it.
How to use
- Enter the principal, annual rate and time in years (decimals fine for months, e.g. 0.5 for six months).
- Read the interest earned, the per-month figure, and the total at maturity — all update live as you type.
- Compare the compounded-monthly stat to see what the same principal earns under compound growth.
Frequently asked questions
What is the formula for simple interest?
SI = P × r × t: principal times annual rate times time in years. $5,000 at 6% for 3 years = 5,000 × 0.06 × 3 = $900 interest, $5,900 total at maturity. The calculator applies the formula exactly and shows the work.
How is simple interest different from compound interest?
Simple interest always computes on the original principal, so growth is linear — the same dollars of interest every year. Compound interest computes on the running balance, so growth accelerates. The stat row shows both for your numbers so the difference is concrete, not theoretical.
When is simple interest used in real life?
Auto loans and many personal loans amortize on simple interest, bonds pay fixed coupons on face value, and short-term notes between 30 days and 5 years often specify it. It is also the standard model in school math and finance exams.
Does partial-year time work?
Yes — time is in years and accepts decimals: 0.5 for half a year, 1.75 for 21 months. Interest scales proportionally, and the per-month stat divides the total interest evenly across the term.