Loan Interest Calculator
Calculate simple and compound interest on any loan amount. Compare both methods side by side with a year-by-year breakdown.
About Loan Interest Calculator
Interest is the price of borrowing money, and small differences in rate or compounding frequency can dramatically change the total cost over years. This loan interest calculator supports both simple interest (where interest is calculated only on the original principal) and compound interest (where interest accrues on accumulated interest), and produces a year-by-year breakdown showing exactly how the total grows.
Useful for comparing two loan offers to see which actually costs less over the full term, projecting savings growth in a fixed deposit, calculating the impact of partial prepayments on a long-term loan, and understanding why two loans with identical interest rates but different compounding frequencies have different real costs. The year-by-year view makes the math intuitive instead of abstract.
How to Use
Enter the principal (loan) amount.
Enter the annual interest rate.
Enter the loan tenure in years or months.
Choose between simple or compound interest.
Click 'Calculate' to see the interest, total repayment, and year-by-year comparison.
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount. Compound interest is calculated on the principal plus any accumulated interest. Over time, compound interest grows much faster than simple interest.
What is compounding frequency?
Compounding frequency is how often interest is calculated and added to the balance. Monthly compounding (12 times/year) means interest is calculated every month. Higher frequency leads to slightly more interest.
Which type of interest do banks use?
Most banks and financial institutions use compound interest for loans and savings. Simple interest is more common in short-term personal loans and some government schemes.
What are the formulas used?
Simple Interest: SI = P × R × T / 100. Compound Interest: CI = P × (1 + R/(100×n))^(n×T) - P, where P = principal, R = annual rate, T = time in years, n = compounding frequency.
Loan Interest Calculator: Simple vs Compound Interest Online
Simple interest grows linearly. Compound interest grows exponentially. Over 20 years, the difference is massive. Learn the math and run your own numbers.
Read the full guide