Principal, Annual interest rate, Time, Time unit
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How this calculator works
Simple interest is the principal multiplied by the rate and the time. Unlike compound interest, earlier interest does not earn interest itself, so the amount grows in a straight line. It is used for many short-term loans, car loans quoted with a flat rate, and some bonds and certificates.
Formula
- Interest = principal × annual rate × time in years
- Total = principal + interest
- Months are converted as months / 12 and days as days / 365
Worked example
5,000 at 4% for 3 years
- Principal
- 5,000
- Annual interest rate
- 4%
- Time
- 3
- Time unit
- Years
Result600.00
Simple interest on 5,000.00 at 4.00% for 3 years. Total 5,600.00.
Things to keep in mind
- Figures are estimates for planning. They are not financial advice, and they ignore taxes and fees unless stated.
Frequently asked questions
What is the formula for simple interest?
I = P × r × t, where P is the principal, r the annual interest rate as a decimal and t the time in years.
What is the difference between simple and compound interest?
Simple interest is calculated on the principal only. Compound interest is calculated on the principal plus the interest already earned, so it grows faster.
How do I calculate interest for a number of days?
Divide the days by 365 to get the time in years. Some lenders use a 360-day year, which gives a slightly higher figure.
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Results are estimates based on the values you enter and the published method shown above. They do not replace professional medical, financial or legal advice. Method reviewed October 7, 2026. About this site