Loan Interest Calculator - Simple and Compound Cost
Calculate simple or compound loan interest, total repayment, and each periodic payment from amount, rate, term, and method.
Enter loan amount, annual rate, term, payment frequency, and simple or compound interest to estimate interest cost and each payment.
Loan Interest Calculator - Simple and Compound Cost
Calculate simple or compound loan interest, total repayment, and each periodic payment from amount, rate, term, and method.
About the Loan Interest Calculator
Interest is the price of borrowed money, but the method used to compute it changes the bill. Simple interest multiplies principal, rate, and time. Compound, amortizing interest recalculates on a declining balance and is the method behind most installment loans and mortgages. The loan interest calculator supports both so you can see a textbook simple-interest total next to a fully amortizing payment at monthly, quarterly, semiannual, or annual frequency.
For simple interest, total repayment is principal times (1 + rate times years), and each periodic payment is that total divided by the number of payments (term times frequency). For compound interest, the periodic rate is the annual rate divided by payments per year, n is term times frequency, and the payment is the standard annuity formula. Interest cost is total of all payments minus principal. A zero rate yields equal principal installments with no interest.
Use the loan interest calculator when a merchant quotes simple interest on a short note, when a bank quotes an amortizing installment, or when you want to see how monthly versus annual compounding changes the payment. Simple interest on a three-year note is easy to audit. A 30-year mortgage must use the compound path or the payment will be wrong. Frequency matters: twelve monthly compound periods are not the same as one annual payment at the same nominal rate.
The compound path is a fully amortizing loan, not continuous compounding and not interest-only. APR disclosures, points, and prepaid finance charges are not added. Simple interest here is the I = Prt identity spread into equal payments; some simple-interest auto loans instead accrue daily on remaining principal, which this page does not emulate.
Pick the method that matches the contract language. If the note amortizes, use compound interest. If a short business advance truly uses I = Prt, use simple interest. Re-run when the rate lock or the payment frequency in the draft agreement changes, and confirm against the lender's amortization schedule before you sign.
Loan Interest Examples
Compound cases use amortizing payments; the simple-interest case uses I = Prt spread across the payment count.
| Scenario | Output | Planning note |
|---|---|---|
| $240,000 at 4.5% for 30 years, monthly compound interest | $197,776.11 interest; $437,776.11 total repaid; $1,216.04 periodic payment | A long amortizing mortgage pays almost as much interest as principal at this rate and term. |
| $10,000 at 8% for 3 years, annual simple interest | $2,400.00 interest; $12,400.00 total repaid; $4,133.33 periodic payment | Simple interest is $10,000 x 0.08 x 3 = $2,400, split into three annual payments. |
| $15,000 at 11.9% for 4 years, monthly compound interest | $3,925.03 interest; $18,925.03 total repaid; $394.27 periodic payment | A high-APR installment still amortizes; the monthly bill is modest while interest remains material. |
How to Calculate Loan Interest
- Enter the loan amount, annual interest rate, and term in years.
- Choose payment frequency and whether interest is simple or compound.
- Calculate interest cost, total repayment, and the payment for each period.
- Switch from simple to compound, or from annual to monthly, to see the method effect.
Loan Interest Calculator FAQ
When should I choose simple interest?
Use simple interest when the contract truly uses I = Prt. Most consumer installment loans and mortgages use compound amortizing interest instead.
Is compound interest the same as APR?
The compound path is an amortizing payment at the nominal annual rate you enter. APR can include fees this loan interest calculator does not add.
Does monthly frequency change simple interest?
Total simple interest depends on years, not on how you slice the payments. Frequency only changes the size of each installment, not the $Prt total.
What if the rate is zero?
Interest cost is zero and each payment is principal divided by the number of periods, for both methods.
Are taxes and insurance included?
No. The payment is principal and interest only. Escrow items belong in a budget, not in this interest total.
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