# Simple Interest Calculator > Simple interest is charged only on the original principal, using I = P × r × t. $10,000 at 5% a year for 3 years earns $1,500 of simple interest, for a total of $11,500. The calculator also works in months or days and can solve for the principal, rate or time. - Interactive calculator: https://calculatorswithsteps.com/simple-interest-calculator - Category: Financial Calculators - Last updated: 2026-11-10 - Publisher: Calculators With Steps (calculatorswithsteps.com) ## How to use the simple interest calculator Choose what you want to find, then fill in the other three values: | To find | Enter | Formula | | --- | --- | --- | | Interest and total | Principal, rate, time | I = P × r × t | | Principal | Interest, rate, time | P = I ÷ (r × t) | | Rate | Principal, interest, time | r = I ÷ (P × t) | | Time | Principal, interest, rate | t = I ÷ (P × r) | Time can be entered in years, months or days. Months are divided by 12 and days by 365 to convert them to years. The result shows the answer, the total amount and each step of the working. ## The simple interest formula **I = P × r × t** - **I** = interest - **P** = principal, the amount deposited or borrowed - **r** = annual interest rate as a decimal (5% = 0.05) - **t** = time in years The total you repay or receive is **A = P + I = P(1 + rt)**. Interest is the same every year because it is always based on the original principal. That makes the balance grow in a straight line, unlike compound interest, which curves upward. ## Worked examples **Interest in years.** $10,000 at 5% for 3 years: I = 10,000 × 0.05 × 3 = **$1,500**, so the total is $11,500. That is $500 a year, about $41.67 a month or $1.37 a day. **Interest in months.** $5,000 at 6% for 18 months: t = 18 ÷ 12 = 1.5 years, so I = 5,000 × 0.06 × 1.5 = **$450**. **Interest in days.** $2,000 at 8% for 90 days: t = 90 ÷ 365 = 0.246575 years, so I = **$39.45**. **Solving for the principal.** To earn $1,000 in 2 years at 5%, you need P = 1,000 ÷ (0.05 × 2) = **$10,000**. ## Simple interest in Excel or Google Sheets The formula translates directly into a spreadsheet. With the principal in A2, the annual rate in B2 and the years in C2, enter `=A2*B2*C2` for the interest and `=A2*(1+B2*C2)` for the total. Typed out, `=10000*5%*3` returns 1,500. For a period in days, divide by 365 inside the formula: `=2000*8%*90/365` returns 39.45. For months, divide by 12. Format the rate cell as a percentage so 5% is stored as 0.05, which avoids the most common spreadsheet error of multiplying by 5 instead of 0.05. ## Simple interest vs compound interest Here is $10,000 at 5% under each method: | Years | Simple interest balance | Compound (annual) balance | | --- | --- | --- | | 1 | $10,500.00 | $10,500.00 | | 2 | $11,000.00 | $11,025.00 | | 3 | $11,500.00 | $11,576.25 | | 10 | $15,000.00 | $16,288.95 | The two methods match for the first year, then compound interest pulls ahead because it earns interest on interest. After 3 years the gap is $76.25. After 10 years it is $1,288.95. To model compounding, use the [compound interest calculator](https://calculatorswithsteps.com/compound-interest-calculator). ## Where simple interest is used - **Auto loans and many personal loans.** Interest accrues daily on the outstanding balance and each payment clears the accrued interest first. Because the balance falls with every payment, the total interest is lower than simple interest on the original amount. The [loan calculator](https://calculatorswithsteps.com/loan-calculator) shows the full payment schedule. - **Short-term notes and bridge loans**, where interest is paid at the end of the term. - **Some certificates and notes** that pay all their interest at maturity, with no compounding along the way. - **Classroom problems.** Simple interest is usually the first interest formula taught in school, before compound interest. ## Common mistakes - **Mixing units.** A rate per year needs time in years. Convert months (÷ 12) and days (÷ 365) first. - **Forgetting the decimal.** Use 0.05 for 5%, not 5. - **Using the wrong day count.** A 360-day year raises interest by about 1.4% compared with 365 days. Check your loan agreement. - **Confusing interest with the total.** I is only the interest. Add the principal to get the amount repaid. ## Frequently asked questions ### What is the simple interest formula? I = P × r × t, where P is the principal, r is the annual rate as a decimal and t is the time in years. The total amount is A = P + I. For $10,000 at 5% for 3 years, I = 10,000 × 0.05 × 3 = $1,500 and A = $11,500. ### How do I calculate simple interest for months? Divide the number of months by 12 to get years. $5,000 at 6% for 18 months is 5,000 × 0.06 × 1.5 = $450. ### How do I calculate simple interest for days? Divide the number of days by 365. $2,000 at 8% for 90 days earns 2,000 × 0.08 × 90 ÷ 365 = $39.45. Some commercial loans divide by 360 instead, which gives $40.00 for the same loan. ### How do I find the interest rate from simple interest? Rearrange the formula: r = I ÷ (P × t). If $10,000 earned $1,500 over 3 years, the rate is 1,500 ÷ 30,000 = 0.05, or 5% a year. ### How long will it take to earn a certain amount of interest? Use t = I ÷ (P × r). To earn $1,000 on $8,000 at 4%, t = 1,000 ÷ 320 = 3.125 years, or 37.5 months. ### What is the difference between simple and compound interest? Simple interest is calculated only on the principal. Compound interest is also charged on interest already added. Over 10 years at 5%, $10,000 earns $5,000 of simple interest but $6,288.95 if interest compounds once a year. ### Do car loans use simple interest? Many U.S. auto loans are simple interest loans. Interest accrues each day on the balance you still owe, and every payment covers that interest before reducing principal. Paying early in the month or paying extra cuts the interest you are charged. ## Sources - [Wikipedia – Interest (simple and compound interest)](https://en.wikipedia.org/wiki/Interest) - [CFPB – What is the difference between a loan interest rate and the APR?](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loans-interest-rate-and-its-apr-en-733/) > Disclaimer: results are estimates for information and education, not financial advice. Confirm important decisions with a qualified professional.