# Simple Interest Calculator

URL: https://speedycalculator.com/calculators/finance/simple-interest/
Last updated: 2026-10-25

> The simple interest calculator works out interest that is charged or earned only on the original principal – not on accumulated interest – for a term in years, months or days, and the final balance.

## Inputs

- Principal
- Annual interest rate (%)
- Term (years, months, days)

## Results

- Total interest
- Final balance
- Interest per year
- Compound interest for comparison (yearly)

## Formula

```
Simple interest = principal × annual rate × time (years)
Final balance = principal + interest
```

## Explanation

Simple interest is used for many car loans, short-term loans, Treasury bills and some bonds. Unlike compound interest, the interest earned each year stays the same.

### How to use the Simple Interest Calculator

- **Principal**
- **Annual interest rate**
- **Term**
- Every result field is editable: type into **Total interest** and **Annual interest rate** plus every other field update to match.

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the principal, the annual interest rate and the term.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterPrincipalAmount in your currencyAnnual interest rateIn %TermUnits: years, months, days

### What each result means

- **Total interest** = [Principal]×[Annual interest rate]÷100×[Term]÷365
- **Final balance** = [Principal] + [Total interest]
- **Interest per year** = [Principal]×[Annual interest rate]÷100
- **Compound interest for comparison (yearly)** = [Principal]×((1 + [Annual interest rate]÷100)^([Term]÷365) - 1)

### Example values

How the main result changes when **Annual interest rate** changes and everything else stays at the example values above:

Annual interest rate (%)Total interest2.57503.751,12551,5006.251,8757.52,250103,000

## Worked example

Inputs — Principal: $10,000; Annual interest rate: 5 %; Term: 3 years.

Results — **Total interest = $1,500.00**; Final balance = $11,500.00; Interest per year = $500.00; Compound interest for comparison (yearly) = $1,576.25.

## FAQ

**What is the simple interest formula?**
I = P × r × t.

**How is simple interest different from compound interest?**
Simple interest is only on the principal; compound interest also earns on interest.

**Where is simple interest used?**
Car loans, short-term personal loans and some bonds.

**What formula does the Simple Interest Calculator use?**
Simple interest = principal × annual rate × time (years).