Simple Interest Loan Calculator

Simple interest loan calculator for quick repayment and interest estimates

A simple interest loan is one of the easiest loan types to estimate because the interest is calculated on the original principal (the starting loan amount), not on a running balance that changes each month. That makes simple interest useful for quick planning, rough comparisons, and situations where you want a clear view of cost without complex amortization schedules. This calculator helps you estimate the total interest and total repayment using just three inputs: loan amount, annual simple interest rate, and the loan term.

To use the calculator, enter your principal (the amount you borrow), the annual interest rate as a percentage, and the term. You can enter the term in years and optionally add extra months for terms like 18 months or 2 years 6 months. Once you calculate, you will see the total interest over the full term, the total amount to repay (principal plus interest), and practical extra figures like estimated interest per month and per day. These secondary outputs are not required for the core formula, but they help you sanity-check the size of the interest and plan cash flow.

What the results mean in practice is straightforward. Total interest is the cost of borrowing over the full term under simple interest assumptions. Total repayment is what you would repay in total if the loan were settled at the end of the term and the interest were charged purely as simple interest. The monthly estimate is a rough average that divides the total repayment by the number of months in the term. It is not a promise of a real payment schedule, but it is a useful baseline for affordability checks and comparing options side by side.

Assumptions and how to use this calculator

• Interest is calculated using simple interest: interest = principal × rate × time (in years).
• The rate you enter is treated as an annual percentage rate applied linearly over time, not compounded.
• The monthly payment shown is an average total repayment divided by months, not an amortized schedule.
• Fees, insurance, taxes, penalties, and payment timing rules are excluded unless your lender bakes them into the quoted rate.
• Day-based figures assume a 365-day year for a practical estimate; lenders may use different day-count conventions.

Common questions

What is the formula for a simple interest loan?

The core formula is: interest = principal × (annual rate as a decimal) × time in years. If you borrow 50,000 at 12% for 2 years, the interest is 50,000 × 0.12 × 2 = 12,000. Total repayment would be 62,000. This calculator automates that and also converts months into a fraction of a year so you can use terms like 18 months without doing manual conversions.

Why does my lender’s quoted payment differ from the calculator’s monthly estimate?

Many common loans are not simple interest in the practical sense of fixed total interest divided evenly across time. Lenders often use amortization (where interest is charged on a changing balance), add initiation or service fees, use specific payment timing rules, or apply compounding. The monthly number here is a rough affordability estimate based on total repayment divided by months. If you need a precise payment schedule, use an amortized loan calculator or the lender’s official quote.

Can I use this for short-term loans like 3 months or 45 days?

Yes, for short terms simple interest is often a reasonable approximation, especially when the lender states interest as a flat rate over a defined period. Use months for short terms and interpret the daily interest figure as a planning guide. If your loan uses daily interest on a changing balance or includes fees that are large relative to the principal, the estimate will be less accurate.

What if I do not know the exact rate or term?

You can still use the calculator for decision-making by using a reasonable estimate. For the rate, use the advertised rate or a conservative higher rate to stress-test affordability. For the term, use the most likely term you will accept. The calculator is designed to still produce useful outputs even if your inputs are not perfect, because it exposes the main drivers of loan cost: principal, rate, and time.

When should I not rely on a simple interest estimate?

Do not rely on this as your final number when the loan is amortized, compounded, or has meaningful fees and add-ons. Mortgages, many personal loans with structured repayment schedules, and credit products that calculate interest on a reducing balance can diverge materially. Use this calculator for quick comparisons and baseline planning, then confirm final costs using the lender’s disclosure documents or a more detailed amortization model.