The Simple Interest Calculator computes the end balance, total interest, principal, interest rate, or term of a simple-interest loan or investment. Choose what you want to solve for, fill in the remaining fields, and click Calculate.
The simple interest calculator determines the interest and end balance of a loan or investment that earns simple interest, and it can also work in reverse to solve for the principal, the interest rate, or the term. Simple interest is the most basic way of calculating the cost of borrowing or the earnings on savings: interest is charged only on the original principal, never on previously accumulated interest. Enter any three of the four values - principal, interest rate, term, and end balance - and the calculator solves for the fourth, then shows a complete year-by-year (or month-by-month) accumulation schedule and a balance growth graph.
Choose what you want to solve for using the tabs above: Balance, Principal, Term, or Rate. The field you are solving for is hidden, and you provide the other three.
Simple interest is interest calculated only on the original principal amount of a loan or deposit. Unlike compound interest, it does not earn "interest on interest" - the interest amount is the same in every period because it is always based on the same starting principal. This makes simple interest easy to understand and quick to calculate, which is why it is commonly used for short-term loans, car loans, some personal loans, and certain bonds.
For example, if you deposit $1,000 at 5% simple interest per year, you earn exactly $50 every year - in year one, year two, and every year after - because the 5% is always applied to the original $1,000, not to the growing balance.
The core formula for simple interest is:
Interest = Principal × Rate × Term
Where the Rate is expressed as a decimal (5% = 0.05) and the Term is measured in the same time unit as the rate (years with an annual rate, months with a monthly rate). The end balance is then:
End Balance = Principal + Interest = Principal × (1 + Rate × Term)
Example: With a principal of $20,000, an annual rate of 3%, and a term of 10 years, the total interest is $20,000 × 0.03 × 10 = $6,000, and the end balance is $20,000 + $6,000 = $26,000. The interest each year is a constant $600.
Because the simple interest relationship is a single equation, it can be rearranged to solve for whichever value is unknown. This calculator does the algebra for you, but it helps to understand each form:
Worked examples (each using principal $20,000, balance $30,000 where relevant):
An important detail of simple interest is that the rate and the term must use the same time unit. This calculator lets you set the rate as per year or per month, and the term in years or months, then automatically converts them so the math is consistent:
This flexibility lets you model both long-term annual arrangements and short-term monthly ones without doing the conversion yourself.
The crucial difference between simple and compound interest is what the interest is calculated on:
Over short periods the difference is small, but over long periods it becomes dramatic. Consider $10,000 at 6% for 30 years. With simple interest you earn $10,000 × 0.06 × 30 = $18,000, ending at $28,000. With annual compounding you end at about $57,435 - more than double the simple-interest result. This is the power of compounding, and it is why most savings accounts, investments, and long-term loans use compound interest rather than simple interest.
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Calculated on | Original principal only | Principal + accumulated interest |
| Interest each period | Constant | Grows over time |
| Growth pattern | Linear (straight line) | Exponential (curve) |
| Common uses | Car loans, short-term loans, some bonds | Savings, mortgages, credit cards, investments |
After you calculate, the tool displays a period-by-period accumulation schedule showing the interest earned each period and the running balance, along with a balance growth graph. Because simple interest is linear, the balance line is a straight, steadily rising line - each period adds exactly the same amount of interest. This visual makes it easy to see how your balance climbs evenly over the term and to compare the principal (your starting point) against the growing total.
Simple interest is calculated as Interest = Principal × Rate × Term, where the rate is a decimal and the term is in the same time unit as the rate. The end balance equals the principal plus the interest.
Simple interest is calculated only on the original principal, so the interest earned each period is constant and the balance grows in a straight line. Compound interest is calculated on the principal plus accumulated interest, so it grows faster over time in an exponential curve.
Yes. Use the Rate tab to find the interest rate needed to reach a target balance, or the Term tab to find how long it takes. Just provide the other three values and the calculator rearranges the formula for you.
The rate and term must use a consistent time unit for the math to be correct, but you do not have to convert them yourself. Set the rate as per year or per month and the term in years or months, and the calculator converts them automatically.
Most U.S. auto loans use simple interest calculated on the outstanding principal balance. This means paying extra toward principal or paying early reduces the interest you owe over the life of the loan.
Because simple interest adds the same fixed amount of interest each period (based on the original principal), the balance increases by a constant amount every period, producing a straight, linear growth line rather than the upward curve of compound interest.