Simple Interest Calculator
This calculator applies the simple interest formula, I = Prt, the kind used by most auto loans and some personal loans. Enter a principal, rate, and time; results update as you type, with a live comparison showing what the same inputs would earn compounded.
The starting amount borrowed or invested
The yearly simple rate
Decimals allowed: 9 months is 0.75
Interest earned
- Total amount (A = P + I)$0
- Same inputs, compounded monthly$0
- Compounding would add$0
The comparison row runs your exact inputs through monthly compounding so the difference is visible, not theoretical.
An estimate from your inputs. Loan contracts set their own day counts and payment timing.
| Year | Interest that year | Total interest | Total amount |
|---|
The formula, worked
Simple interest is I = P × r × t: principal times the annual rate (as a decimal) times time in years. The total amount is A = P(1 + rt). At $10,000, 6%, and 4 years: I = 10,000 × 0.06 × 4 = $2,400, for a total of $12,400. Every year adds the same $600 because the interest never joins the principal.
That flatness is the entire contrast with compounding, where each year's interest is a little bigger than the last. The comparison row in the results runs your same inputs at monthly compounding; on short timelines the gap is small, which is why simple interest survives in short-term lending, and on long timelines it widens relentlessly. Our formula guide walks the compound side in detail.
Built by Cedrick Reese of Ready Utilities. The I = Prt formula and its worked example are checked against the simple interest methodology used in U.S. regulatory consumer education materials, and the loan-type claims in the FAQ are cited to Experian and the Consumer Financial Protection Bureau, checked at the time this page was written and reviewed on a maintenance cycle. The period ledger is generated from the same arithmetic as the headline figure. Last reviewed: September 1, 2026.
Frequently asked questions
What is the difference between simple and compound interest in one sentence?
Simple interest pays only on the original principal; compound interest also pays on the interest already earned, which is why compound balances pull ahead over time.
Which real loans actually use simple interest?
Most U.S. auto loans use simple interest calculated on the outstanding balance, per Experian, and the Consumer Financial Protection Bureau describes simple interest as far more common than precomputed interest for car loans. Some personal loans work the same way. Savings products, by contrast, almost always compound.
My loan term is in months. What do I enter for time?
Divide the months by 12. Nine months is 0.75 years. The calculator accepts decimals, so enter 0.75 directly.