How to use the simple interest calculator
Enter the amount lent or borrowed, the yearly rate and the length of time. Simple interest is charged on the original amount only, so it grows in a straight line: the same interest every year. It is common for short loans, some car finance and bonds that pay a fixed coupon.
The formula
Interest = P × r × t
where P is the amount, r is the yearly rate as a decimal and t is the time in years. Months are divided by 12 and days by 365 to turn them into years.
Worked example
5,000 at 4% for 3 years earns 5,000 × 0.04 × 3 = 600 in interest, for a total of 5,600.
Results are estimates for planning. They are not financial advice, and a lender’s own figures may differ because of fees and rounding.
Common questions
How is simple interest different from compound interest?
Simple interest is always worked out on the original amount. Compound interest is worked out on the amount plus the interest already added, so it grows faster.
Does it use 360 or 365 days in a year?
This calculator uses 365. Some lenders use 360, which gives a slightly higher interest figure.
Can I find the rate if I know the interest?
Rearrange the formula: rate = interest ÷ (amount × time). Multiply by 100 for a percentage.