Simple Interest Calculator
Calculate simple interest on a loan, CD, or short-term note — principal, rate, and time with no compounding.
What is Simple Interest Calculator?
Simple interest is interest calculated only on the original principal — not on any interest that accrues. It is the standard method for short-term loans, personal promissory notes, most auto loans in the U.S., and some Certificates of Deposit (CDs).
Use this calculator to see how much a loan will actually cost or how much a fixed-rate deposit will earn before taxes.
Formula
I = P × R × T
- I = interest
- P = principal (starting amount)
- R = annual rate (as a decimal — 5% = 0.05)
- T = time in years
Maturity value = P + I. For terms in months, T = months / 12; for days, T = days / 365.
Worked example
A $10,000 note at 5% simple interest for 3 years:
- I = 10,000 × 0.05 × 3 = $1,500
- Maturity value = $11,500
How to use this calculator
- Enter the principal — the loan amount or initial deposit.
- Type the annual interest rate as a percentage (e.g., 5 for 5%).
- Pick years, months, or days for the term and enter the number.
- The calculator shows total interest, maturity value, and per-month/per-day amounts.
Frequently asked questions
When is simple interest used?
Common uses: most U.S. auto loans, short-term personal loans, bridge loans, treasury bills, some CDs, and informal promissory notes between individuals. Mortgages and credit cards use compound interest instead.
Simple interest vs compound interest — which is better?
For borrowers, simple interest is better (you pay less). For savers, compound interest is better (you earn more). A 5% simple-interest CD for 5 years pays 25% total; a 5% compounding CD pays ~28%.
Do U.S. auto loans really use simple interest?
Yes — by law in most states, federally-regulated auto loans are simple-interest loans. Interest accrues daily on the outstanding balance, so paying early in the month saves more than paying late.
What rate should I use for a CD or savings account?
Use the APY (annual percentage yield) for an accurate comparison. If the product compounds (most banks do), APY already accounts for that — plugging it into this simple-interest calculator will slightly understate earnings.