💰 Loan Interest Calculator
Calculate loan interest
How to Use This Calculator
Enter Principal Amount
Input the principal loan amount - the amount you're borrowing or the initial loan balance.
Enter Interest Rate
Enter the annual interest rate as a percentage. This is the rate charged on the loan.
Enter Time Period
Enter the time period and select the unit (years, months, or days) for which you want to calculate interest.
Review Interest Calculation
See the total interest, annual interest, monthly interest, and total amount (principal + interest).
Formula
Simple Interest = Principal × Rate × Time
Total Amount = Principal + Interest
Example Calculation:
If principal $10,000, rate 5%, time 2 years:
• Annual interest = $10,000 × 5% = $500/year
• Total interest (2 years) = $10,000 × 5% × 2 = $1,000
• Total amount = $10,000 + $1,000 = $11,000
• Monthly interest = $500 ÷ 12 = $41.67/month
About Loan Interest Calculator
A loan interest calculator helps you calculate simple interest on loans. Simple interest is calculated on the principal amount only, without compounding. This calculator shows you how much interest you'll pay over a specific time period, along with annual, monthly, and daily interest breakdowns. Understanding loan interest helps you understand the true cost of borrowing and plan your finances accordingly.
When to Use This Calculator
- Interest Estimation: Estimate interest on loans
- Loan Comparison: Compare interest costs on different loans
- Financial Planning: Plan for interest payments
- Simple Interest Loans: Calculate interest on simple interest loans
Understanding Simple Interest
- Definition: Interest calculated only on principal amount
- No Compounding: Interest doesn't compound (unlike compound interest)
- Calculation: Principal × Rate × Time
- Common Uses: Short-term loans, some personal loans, simple interest accounts
Why Use Our Calculator?
- ✅ Quick Calculation: Instantly see interest amounts
- ✅ Multiple Timeframes: Calculate for years, months, or days
- ✅ Breakdown: See annual, monthly, and daily interest
- ✅ Cost Awareness: Understand true cost of borrowing
- ✅ 100% Free: No registration or payment required
Simple Interest vs. Compound Interest
- Simple Interest: Calculated only on principal (this calculator)
- Compound Interest: Calculated on principal plus accumulated interest
- Loan Types: Most loans use compound interest (amortized loans)
- This Calculator: For simple interest loans or estimates
Frequently Asked Questions
What is simple interest?
Simple interest is interest calculated only on the principal amount, without compounding. The formula is: Interest = Principal × Rate × Time. Unlike compound interest, simple interest doesn't accumulate on previously earned interest.
Do most loans use simple or compound interest?
Most loans use compound interest (amortized loans), where interest is calculated on the outstanding balance and compounds over time. Simple interest is less common and typically used for short-term loans or some personal loans. This calculator is for simple interest calculations.
How does this differ from an amortized loan calculator?
Amortized loans calculate interest on the outstanding balance, which decreases over time. Simple interest calculates interest on the original principal only. Amortized loans typically result in higher total interest because interest compounds, while simple interest is straightforward and doesn't compound.
Can I use this for compound interest loans?
This calculator is for simple interest only. For compound interest loans (most mortgages, auto loans, etc.), use an amortization calculator or loan payment calculator, which accounts for the changing balance and compound interest.