Free Simple Interest Calculator: I=Prt, Loan Compare & Amortization

Lenders advertise APR — but many personal loans, auto loans, and merchant cash advances embed hidden fees that push the effective rate far above the stated number. Use Module 1 → Solve for Rate: enter the loan principal, the total interest you’ll actually pay (from the loan disclosure), and the term. The result is the true simple interest rate — compare it to what the lender advertised.

If a lender says “7% APR” but your loan disclosure shows $4,200 in interest on a $25,000 2-year loan, the real rate is: r = $4,200 ÷ ($25,000 × 2) = 8.4% — not 7%. That 1.4% gap on $25,000 is $700 over 2 years.

Unlike compound interest loans where interest capitalizes regardless, simple interest accrues daily on the declining balance. Every dollar of principal you reduce — and every day earlier you reduce it — cuts future interest.

On a $30,000 auto loan at 6.5%, each day of principal reduction saves approximately $5.34 in future interest ($30,000 × 6.5% ÷ 365). Paying 3 days early every month saves ~$192 per year. Over a 5-year loan, that compounds to nearly $960 saved — with zero extra principal payments.

Banks rarely advertise whether a loan uses simple or compound interest — it’s buried in the fine print. The difference is material for business loans over 3+ years. Use Module 2 (Loan Compare) to input any loan offer and instantly see the dollar gap between SI and CI at the same rate.

On a $100,000 business loan at 8% for 5 years: SI total interest = $40,000. CI (monthly compounding) total interest = $48,977. The difference: $8,977 — enough to cover a full employee’s monthly salary. Always ask your lender explicitly: “Is this simple or compound interest?”

A HYSA paying 4.5% looks attractive — until you subtract 22% federal tax (effective rate: 3.51%) and 3% inflation (real rate: 0.49%). You’re barely preserving purchasing power. Use Module 4 to see your true real after-tax return for any account type.

For money you don’t need for 5+ years, compare a 4.5% HYSA (taxable, real rate ~0.5%) against a Roth IRA invested in an S&P 500 index fund (~10% nominal, 0% tax, ~6.8% real). The Roth wins by approximately 6.3 percentage points per year in real after-tax return — exponentially more over time.

US Treasury Bills use a 360-day banking year (called the “bank discount basis”) while most consumer loans use 365 days. This creates a small but meaningful discrepancy. A T-Bill with a 4.62% discount rate has an actual bond equivalent yield (BEY) of approximately 4.73% when converted to a 365-day basis.

In Module 1, select Time Unit → Days and enter 360 for a T-Bill or 365 for a consumer loan to get precise results. For very short-term instruments (30-day, 60-day T-Bills), the day-count convention makes a meaningful difference in the final comparison.

Before refinancing any loan, use Module 5 (Multi-Period Comparison) to compare all options simultaneously. Set up 4 scenarios: (1) current loan balance + remaining term + current rate, (2) refi option A, (3) refi option B, (4) accelerated payoff of current loan. The chart makes the total cost difference visually obvious.

Common mistake: borrowers focus on monthly payment reduction without checking total interest. A refinance that drops your monthly payment by $150 but extends your term by 3 years often costs $5,000–15,000 more in total interest. Module 5’s effective annual return column reveals the true cost difference.

Before any loan closing, run your loan parameters through Module 6 (Amortization Schedule), click Generate Schedule, then export the PDF. Bring it to the meeting. Compare it line-by-line against the lender’s amortization table — any discrepancies in principal allocation, interest amounts, or balloon payments are red flags that may indicate undisclosed fees or a different rate structure.

US law (TILA/Reg Z) requires lenders to provide an amortization schedule at closing — but most borrowers never check it. This tool gives you an independent calculation to verify against. Mismatches of more than $10–20 per period should be questioned in writing before signing.

Bridge loans, construction loans, and some commercial mortgages are interest-only during the draw period — you pay only interest each month, with the full principal due as a balloon payment at maturity. In Module 6, select Payment Structure → Interest-Only (Balloon) to model this correctly.

On a $300,000 bridge loan at 9.5% for 12 months: monthly interest-only payment = $2,375. Total interest = $28,500. The entire $300,000 principal is due at month 12. This is ideal for short-term flips where you plan to sell or refinance before the balloon — but dangerous if the exit strategy falls through. Always model the worst-case scenario with extra time in the schedule.