Frequently Asked Questions
Calculate simple interest for loans and mortgages instantly. Enter principal, rate, and time to get accurate results — trusted by investors worldwide.
Simple interest is calculated only on the principal — the original amount borrowed or invested — and never on previously accumulated interest. Compound interest, by contrast, is calculated on both the principal and the interest that has already been added. For borrowers, simple interest loans are generally more predictable and cost less over time.
The standard formula is Interest = Principal × Annual Interest Rate × Time, where Time is expressed in years, and if you enter months or days, the calculator converts them automatically using your selected “Days in Year” basis (360 or 365).
The principal is the original sum of money borrowed from a lender, or the face value of a bond, or the original amount invested — before any interest is added. For example, if you take out a $4,000 loan, your principal is $4,000.
360 days is the “bank year” convention, widely used in commercial loans, mortgages, and bond markets. It simplifies calculations and is common in the U.S. and international finance. 365 days reflects the actual calendar year and is typically used for personal loans and some government bonds. When in doubt, check your loan agreement — it will specify which convention applies.
Yes. This calculator supports years, months, and days simultaneously. You can enter any combination — for example, 1 year + 6 months + 15 days — and the calculator will convert the total time period into a decimal fraction of a year before computing the interest.
Simple interest mortgages do exist, though they are less common than amortizing mortgages. With a simple interest mortgage, interest accrues daily based on the outstanding principal. This means paying early reduces your interest cost, while paying late increases it. This calculator gives you a quick estimate for comparison purposes.
This calculator uses the standard simple interest formula and is suitable for estimation and educational purposes. For legally binding financial decisions — such as signing a loan or mortgage agreement — always verify results with your lender or a qualified financial advisor, as actual loan terms may include fees, compounding, or other conditions not captured by simple interest alone.
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