Calculate simple interest — interest computed only on the original principal, with no compounding. Common for short-term loans and some bonds.
Estimates only. This tool is provided for educational purposes and is not financial advice. It models the figures you enter — it does not know your credit terms, local taxes, or fees. Talk to a licensed adviser before making a decision.
$10,000 at 5% for 3 years.
Total (principal + interest): $11,500 — interest alone is $1,500. Unlike compound interest, this never earns interest on interest.
Simple interest is charged only on the principal. Compound interest also charges on accumulated interest. Simple interest is common on some short-term loans, car loans (sometimes), and certain bonds.
I = P × r × t · Total = P + I
When is simple interest used?
Some short-term personal loans, certain bonds (like T-bills), and auto-loan pre-computed interest in some jurisdictions.
Is simple interest cheaper than compound?
For the same headline rate and term, yes — because it never compounds. That's why it's rare on long-term debt.
What if time is in months?
The tool converts months to years (÷12) and days to years (÷365) before applying the annual rate.