Simple Interest Calculator
Calculate simple interest I = P × r × t from principal, rate, and time.
Returns total interest, total amount, and comparison to compound interest growth.
Simple interest is calculated only on the original principal amount — it does not compound (interest does not earn further interest). It is used for short-term loans, savings bonds, and some personal loans.
The formula: I = P × r × t
Where:
- I = interest earned or paid
- P = principal (the starting amount)
- r = annual interest rate (as a decimal, so 5% = 0.05)
- t = time in years
Total amount after interest: A = P × (1 + r × t) Or equivalently: A = P + I
Worked examples:
Example 1 — Savings: Deposit £5,000 at 4% simple interest for 3 years. I = £5,000 × 0.04 × 3 = £600 Total after 3 years = £5,600
Example 2 — Loan: Borrow £2,000 at 8% simple interest for 18 months (1.5 years). I = £2,000 × 0.08 × 1.5 = £240 Total repayment = £2,240
Example 3 — Car loan comparison: £15,000 loan at 6% simple interest for 5 years: Interest = £15,000 × 0.06 × 5 = £4,500 Total = £19,500
Simple vs compound interest: With simple interest at 5% on £10,000 over 5 years: £12,500 With compound interest at 5% on £10,000 over 5 years: £12,763 The difference grows significantly over longer periods — over 30 years, compound interest at 5% produces £43,219 vs £25,000 with simple interest.
Where simple interest appears:
- Treasury bills and some government bonds
- Most car loans (US)
- Some personal loans
- Short-term business loans
- Penalty interest on late tax payments (HMRC, IRS)
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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