Simple Interest Calculator
Compute simple interest on a principal at a fixed annual rate.
Calculator
Use the Simple Interest Calculator
Result
—
Formula
I = P × r × t ÷ 100
Step-by-step
- 1
Enter the principal
The original amount.
- 2
Enter rate and time
Annual percentage rate and years.
Worked example
Example input: principal: 1000, rate: 5, years: 3
Result: 150
Related tools
- Compound Interest
Interest on interest.
- Loan Payment
Monthly EMI.
Frequently asked questions
What is the simple interest formula?
SI = P x R x T / 100 — principal times annual rate times years. One thousand at 5% for 2 years earns exactly 100, because the interest stays proportional to time with no compounding. Loan documents quote the rate yearly, so enter years and decimal terms alike: half a year is 0.5.
How is it different from compound interest?
Simple interest ignores earned interest when it counts the next year, while compound interest adds interest on interest. At 5% over 2 years the simple path pays 100 while compounding pays about 102.50.
When is simple interest actually used?
Short loans, car deals, and bonds priced flat still quote simple interest, since over months the gap versus compounding stays small. The linear rule also makes payment schedules trivial to verify by hand.