Loan

Loan calculator for simple interest and estimated monthly payments.

This page is designed for learning and rough planning. It helps you compare a simple-interest example with an amortized-payment estimate, but it does not replace an actual loan disclosure or financial advice.

Simple interest

Simple interest resultUse for education or rough comparisons.

Monthly payment estimate

Monthly payment resultThis estimate assumes a fixed-rate amortizing loan.

Key formulas

Simple interest: I = P * r * t.

Total repayment: P + I.

Monthly payment estimate: M = P * [r(1+r)^n] / [(1+r)^n - 1] using monthly rate r and number of months n.

Important limit

Real loans may include fees, compounding details, insurance, taxes, late-payment rules, and lender-specific rounding. Verify against the lender documents.

Use cases

  • Classroom finance examples.
  • Rough comparison of borrowing scenarios.
  • Checking whether an advertised rate feels plausible.

Worked examples

  1. Simple interest on $1,000 at 5% for 2 years: 1000 * 0.05 * 2 = 100. Total repayment is $1,100.
  2. Simple interest on $10,000 at 4% for 3 years: interest is $1,200 and total repayment is $11,200.
  3. Monthly payment example: a $15,000 loan at 6.5% over 60 months produces a fixed-payment estimate using the amortization formula, not the simple-interest formula.

Common mistakes

  • Using a percent like 5 instead of 0.05 inside formulas.
  • Applying the simple-interest formula to a compound-interest installment loan.
  • Ignoring the loan term when comparing payment offers.
  • Comparing monthly payments without checking total interest paid.

FAQ

Is simple interest the same as amortized interest?

No. Simple interest uses a direct principal-rate-time relationship. Many real consumer loans use fixed monthly payments with interest calculated over a schedule.

Why include both calculations on one page?

Students often search for both ideas together. Putting them side by side also helps explain why one formula does not fit every loan.

Practice with Examples

Click any example below to automatically fill in the calculator and see the loan calculations.

Simple Interest
$10,000 @ 5% for 3 years
Interest: $1,500
Simple Interest
$5,000 @ 4% for 2 years
Interest: $400
Monthly Payment
$15,000 @ 6.5% for 60 mo
~$293/month
Mortgage
$250,000 @ 4.5% for 30 yr
~$1,267/month
Simple Interest
$20,000 @ 7% for 5 years
Interest: $7,000
Auto Loan
$30,000 @ 5.9% for 72 mo
~$496/month

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Related reading

See Simple Interest on Loans and use the Percent Calculator when you need help converting rates.