Simple Interest Loan Amortization Schedule: Calculator

A simple interest loan amortization schedule shows how each payment is divided between interest and principal, and how the balance changes over time. Enter the loan amount, annual interest rate, and term to estimate a fixed monthly payment and total interest; the schedule below explains the period-by-period calculation.

Formula

This calculator estimates a level-payment loan using monthly amortization: the monthly payment is the amount that, at a fixed monthly rate, pays the starting balance down to zero over the stated number of months. It is a useful schedule estimate, but “simple interest” loans can calculate daily interest on the outstanding principal. Actual payment allocations on those contracts may differ when payment dates vary.

The payment formula is M = P × r / [1 − (1 + r)⁻ⁿ], where:

• P is the amount borrowed, in dollars.
• apr is the annual percentage rate entered as a percentage, such as 8 for 8%.
• r is the monthly rate as a decimal: apr ÷ 1,200.
• n is the number of monthly payments: years × 12.
• M is the monthly payment in dollars, rounded to cents.

Total interest in this estimate is I = M × n − P. The calculator uses the rounded monthly payment to calculate that total, so the result follows the displayed payment. It assumes the regular payment is made on schedule and does not model a final adjusted payment for rounding.

Worked Example

Using the calculator’s defaults—$20,000 principal, 8% APR, and a five-year term—the monthly rate is 0.08 ÷ 12 = 0.0066667, and the number of payments is 5 × 12 = 60.

1. Payment: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = approximately $405.53 per month.
2. Total of scheduled payments: $405.53 × 60 = $24,331.80.
3. Estimated total interest: $24,331.80 − $20,000 = $4,331.80.

These figures follow the block’s formula and cent-rounded payment. A lender’s exact figures can vary with its interest method, payment dates, rounding, fees, and final-payment adjustment.

How to Read an Amortization Schedule

A full schedule has one row per payment. Its usual columns are payment number or date, starting balance, payment amount, interest charged, principal repaid, and ending balance. For a standard monthly-rate schedule, calculate each row as follows:

1. Find the period’s interest: starting balance × monthly rate.
2. Find principal repaid: payment − interest.
3. Find ending balance: starting balance − principal repaid.
4. Use that ending balance as the next row’s starting balance.

For example, at the start of the default loan, one month’s estimated interest is $20,000 × 0.0066667, or about $133.33. Of the $405.53 payment, about $272.20 reduces principal, leaving approximately $19,727.80. Small differences can appear if each line is rounded to cents rather than calculated at full precision.

As the balance declines, the interest portion generally gets smaller and the principal portion larger, even though the scheduled payment stays level. That is the characteristic pattern of an amortizing loan. A schedule can help explain the timing of principal reduction, but it does not by itself tell you the lender’s payoff amount on a particular date.

Simple Interest and Amortization: What Differs

“Simple interest” describes interest calculated on principal rather than interest being added to principal and itself earning interest. In a loan contract, the practical method may be daily simple interest: interest accrues from day to day on the outstanding balance, often using the elapsed days and a stated annual-rate convention. Paying earlier or later than scheduled can then change the amount allocated to interest, because the balance has been outstanding for a different length of time.

The calculator instead applies a monthly rate of APR ÷ 12 and assumes regular monthly periods. That is the standard fixed-payment amortization formula, not a day-by-day ledger. Some loans marketed or described as simple-interest loans use payment schedules that look similar, but the contract’s calculation method determines the actual allocation. “Simple interest” does not mean every payment reduces principal by the same amount.

When to Use This Estimate and Its Limits

Use this calculation to understand the relationship among a principal amount, rate, term, payment, and estimated total interest. It can also serve as a starting point for checking a quoted schedule when the loan uses a fixed rate and equal monthly payments. Enter the annual rate as a percentage, not a decimal: type 8 for 8%, not 0.08. Enter the term in years; the formula converts it to months.

• Check whether the quoted rate is the APR or a different rate. This calculator treats the input as a nominal annual rate divided evenly into monthly periods.
• Confirm the number of payments and payment frequency. A term of five years means 60 monthly payments under this model.
• Do not assume the estimated interest is the full cost of borrowing. The calculator has no inputs for fees or other loan costs.
• For a daily-simple-interest contract, irregular payment dates, skipped or extra payments, or a variable rate, request the lender’s schedule or payoff calculation for the exact figures.

Rounding matters most when many payments are involved. The calculator rounds the regular payment to cents and multiplies that amount by the number of months for its total. A lender may instead retain extra precision internally, round interest each period, or adjust the final payment to clear the remaining balance. Therefore, a reconstructed schedule may be off by a small amount even when its inputs appear identical.

Assumptions

• Fixed rate: the entered APR remains unchanged for the full term.
• Payment timing: equal payments are made monthly at the end of each modeled period.
• Compounding and rate conversion: monthly at APR ÷ 12, using the standard level-payment amortization formula.
• Not included: fees, taxes, insurance, PMI, escrow, late charges, extra payments, and lender-specific daily-interest or rounding rules.

Frequently Asked Questions

How do I calculate the interest part of a loan payment?
For this monthly model, multiply the balance at the start of the period by the monthly rate, APR ÷ 1,200. Subtract that interest amount from the payment to estimate the principal portion.

Does a simple interest loan have an amortization schedule?
It can. A schedule lists how payments reduce the balance and cover accrued interest. The exact entries depend on whether interest is calculated monthly or daily and on the contract’s payment-date and rounding rules.

Why does the interest portion decrease over time?
With a fixed rate and a declining balance, each period’s interest is calculated on a smaller amount. If the payment stays level, the part left over for principal reduction consequently increases.

Does paying early change simple interest?
It can on a daily-simple-interest loan because fewer days may mean less interest accrues before payment. The effect depends on the contract’s method and how the lender applies payments; this calculator assumes regular monthly timing.

Why does my lender’s schedule differ from this result?
Possible causes include daily rather than monthly accrual, different payment dates, payment rounding, fees, a different APR convention, or an adjusted final installment. Compare the inputs and calculation method, and use the lender’s disclosure for contract-specific amounts.

This result is an estimate for education, and the lender’s disclosure gives the exact figures.

Related

• Loan Amortization in Office 365: What It Can Do
• Loan Amortization Interest Formula and Calculator
• Loan Amortization in QuickBooks Online Explained

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2