Printable Simple Interest Loan Amortization

Simple Interest Loan Formulas:

\[ \text{Total Interest} = P \times r \times t \] \[ \text{Monthly Payment (PMT)} = \frac{P + \text{Total Interest}}{n} \]

Monthly Payment (PMT):

Total Interest:

Total Repayment:

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1. What is a Simple Interest Loan?

A simple interest loan calculates interest only on the principal balance, unlike compound interest loans. The total interest is calculated upfront and added to the principal, then divided into equal monthly payments.

2. How Does the Calculator Work?

The calculator uses these simple interest formulas:

\[ \text{Total Interest} = P \times r \times t \] \[ \text{Monthly Payment} = \frac{P + \text{Total Interest}}{n} \]

Where:

\( P \) — Principal loan amount (USD)
\( r \) — Annual interest rate (decimal)
\( t \) — Time in years
\( n \) — Number of months (t × 12)

Explanation: The interest is calculated once based on the original principal, and payments are evenly distributed over the loan term.

3. Importance of Amortization

Details: An amortization schedule shows the breakdown of each payment into principal and interest components, helping borrowers understand how their payments are applied over time.

4. Using the Calculator

Tips: Enter principal in USD, annual interest rate as decimal (e.g., 5% = 0.05), and loan term in years. The calculator will generate a printable amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest loans?
A: Simple interest calculates on the original principal only, while compound interest calculates on principal plus accumulated interest.

Q2: Are car loans simple interest loans?
A: Most auto loans are actually amortized loans (compound interest), not simple interest loans.

Q3: When are simple interest loans typically used?
A: Often for short-term loans, personal loans between individuals, or some types of business loans.

Q4: How can I pay less interest on a simple interest loan?
A: Make additional principal payments to reduce the outstanding balance faster.

Q5: Is the monthly payment fixed in a simple interest loan?
A: Yes, payments are equal throughout the loan term in this calculation method.