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Business finance / Simple Interest Calculator

Simple Interest Calculator

Simple interest on a loan or deposit from the principal, yearly rate and time in years, months or days.
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Simple interest
$1,800.00
$11,800.00total owed
$1.64per day
3in years
$0total $11,800.00
  • Principal
  • Interest
Principal$10,000.00
Interest (6% × 3 years)$1,800.00
Total owed$11,800.00
Compound interest, monthly, for comparison$1,966.81

Compounded monthly, the same rate would earn $166.81 more, because interest would also be charged on interest.

See breakdown

How the simple interest calculation works

  1. Interest = principal × rate × time

    Time is in years. $10,000 at 6% for 3 years is $10,000 × 0.06 × 3 = $1,800.

  2. Convert months and days to years

    Divide months by 12 and days by 365. 90 days at 6% on $10,000 is $10,000 × 0.06 × 90 ÷ 365 = $147.95.

  3. Add the interest to the principal for the total

    $10,000 + $1,800 = $11,800 owed at the end.

  4. Simple interest never charges interest on interest

    That's the difference from compound interest. The comparison line shows what monthly compounding would add.

Worked example. $10,000 at 6% simple interest for 3 years earns $1,800, so the total is $11,800. That's $1.64 a day. Compounded monthly, the same rate would earn $1,966.81.

Simple Interest FAQ

What is the simple interest formula?

I = P × r × t: principal times the yearly rate (as a decimal) times the time in years. The total owed is P + I.

How do I calculate simple interest for days?

Divide the number of days by 365 and use that as the time. Some lenders use a 360-day year, which gives slightly more interest.

What is the difference between simple and compound interest?

Simple interest is charged only on the original principal. Compound interest is also charged on interest already added, so it grows faster over time.

Which loans use simple interest?

Many auto loans, short-term business loans and personal loans charge simple interest on the outstanding balance. Interest-only periods also work this way.

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