BCBetter Calculators

Simple Interest Calculator

Calculate simple interest, total repayment, and interest rate for any loan or savings account.

$
%
🧮

Enter your values and click Calculate

How It Works

Simple interest is calculated with the formula I = P × R × T, where I is the interest earned, P is the principal (the original loan or deposit amount), R is the annual interest rate expressed as a decimal (e.g. 5% becomes 0.05), and T is the time period in years. The total amount returned or owed is then P + I. Unlike compound interest, the interest is always calculated on the original principal only — it never earns interest on itself. When you enter time in months, the calculator divides by 12 to convert to years; when you enter days, it divides by 365. The effective rate for the period shows how much of the principal was earned as interest across the entire duration, giving you a simple way to compare different time spans at a glance.

Examples

$5,000 at 5% for 3 Years
A simple savings scenario.
Result: $750 interest, $5,750 total.
$1,000 at 8% for 180 Days
A short-term loan or deposit.
Result: $39.45 interest, $1,039.45 total.
$20,000 car loan at 6% for 48 months
Auto loan interest calculation.
Result: $4,800 interest, $24,800 total repayment.

Frequently Asked Questions

When is simple interest used?
Simple interest is commonly used for short-term personal loans, some car loans, certain savings accounts, and certificates of deposit. Most long-term mortgages and investment accounts use compound interest, which adds interest on top of previously earned interest and creates faster growth.
Is simple or compound interest better for borrowers?
Simple interest is better for borrowers because the interest is always calculated on the original principal — it never accumulates on itself. For savers and investors, compound interest is more advantageous because it generates exponential growth by earning returns on previously earned returns.
How does changing the time unit affect the result?
The calculator converts months and days into years before applying the formula. Using months or days allows you to calculate interest for periods shorter than a year with precision. For example, a 6-month deposit is treated as 0.5 years, and a 30-day loan is treated as 30 ÷ 365 ≈ 0.0822 years.

Recommended Resources

Related Calculators

finance💰

Compound Interest

See how your savings grow over time with the power of compounding interest.

Calculate →
finance💰

Loan Payment

Calculate monthly payments, total interest, and total cost for any personal or auto loan.

Calculate →
finance💰

Mortgage

Calculate your monthly mortgage payment, total interest paid, and full amortization breakdown.

Calculate →