Simple Interest Calculator
Calculate simple interest on loans and investments, evaluate daily interest accrual, and view linear timeline schedules.
Total interest accrued
Principal + interest combined
Accrues each month
Daily per diem interest
| Period | Cumulative Interest | Total Balance |
|---|---|---|
| Year 1 | +$250.00 | $5,250.00 |
| Year 2 | +$500.00 | $5,500.00 |
| Year 3 | +$750.00 | $5,750.00 |
Understanding Simple Interest Mechanics
Simple interest is the most transparent method for calculating financing costs. Because interest charges do not compound or snowball, borrowers can accurately predict their exact finance charges over any designated holding period.
Formula Breakdown
Practical Lending Applications
- ✓Family & Peer-to-Peer Promissory Notes
Draft fair, legally documented personal loan agreements with simple non-compounding interest rates.
- ✓Auto Loans with Simple Interest Financing
Understand how daily per-diem interest accrues between monthly car payments and how early payments save money.
- ✓Short-Term Commercial Working Capital
Calculate short 30, 60, or 90-day invoice factoring and inventory financing finance charges.
- ✓Finance & Math Education
Help students master the fundamental I = Prt financial mathematics formula with instant visual validation.
Why Use This Simple Interest Tool
Flexible Time Units (Years, Months, Days)
Input loan durations across multiple timeframes to match commercial contract language.
Daily & Monthly Accrual Rates
Computes exact per-diem interest charges so borrowers know their daily borrowing cost.
Timeline Schedule & CSV Export
Download an itemized spreadsheet tracking periodic interest accrual over the lifetime of the loan.
100% Client-Side Private Calculation
No financial data is ever sent to or stored on servers; all math executes instantly in your browser.
Frequently Asked Questions
What is the simple interest formula?
The simple interest formula is I = P * r * t, where I is the total interest accrued, P is the initial principal amount, r is the annual nominal interest rate in decimal form (Rate % / 100), and t is the time duration in years.
How does simple interest differ from compound interest?
Simple interest is calculated exclusively on the original principal amount borrowed or invested. Compound interest, in contrast, calculates interest on both the principal and previously accumulated interest, resulting in exponential growth rather than linear growth.
What is per-diem interest?
Per-diem interest is the amount of interest that accrues on a loan each day. It is calculated by multiplying the outstanding principal balance by the annual interest rate, then dividing by 365 (or 360 in commercial bank conventions).
Do auto loans use simple interest?
Yes, the vast majority of consumer auto loans use simple interest financing. Because interest accrues daily based on your remaining principal balance, paying early in the billing cycle reduces total interest paid.
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