Simple Interest Payment Schedule Calculator

A simple interest payment schedule shows how each payment is divided between interest and principal, and how the balance changes over time. Enter the original loan amount, annual interest rate, term, and payment frequency to calculate the regular payment, total interest, and final balance; the schedule assumes payments are made at the end of each period.

Formula

This calculator uses a fixed-payment, monthly amortization formula. The payment is calculated as PMT = P × r ÷ [1 − (1 + r)−n], then rounded to the nearest cent. Here, P is the starting principal in dollars, r is the monthly rate as a decimal (annual rate in percent ÷ 1,200), and n is the number of monthly payments (years × 12). Total interest is PMT × n − P, using the rounded monthly payment.

The inputs are a loan amount of $20,000, an annual rate of 8%, and a five-year term. At 8% per year, the monthly rate is 0.08 ÷ 12, or 0.0066667. The term is 5 × 12 = 60 monthly payments. This is a level-payment schedule: each payment amount is the same, while the portions going to interest and principal change from month to month.

Worked Example

Using the calculator’s default values:

• Monthly rate: 8 ÷ 1,200 = 0.0066667.
• Number of payments: 5 × 12 = 60.
• Unrounded payment: 20,000 × 0.0066667 ÷ [1 − (1 + 0.0066667)⁻⁶⁰] ≈ $405.53.
• Monthly payment, rounded to cents: $405.53.
• Total of payments: $405.53 × 60 = $24,331.80.
• Total interest: $24,331.80 − $20,000 = $4,331.80.

The schedule’s initial interest portion is $20,000 × 0.0066667, about $133.33. Subtracting that from the $405.53 payment leaves about $272.20 applied to principal, so the next period starts with a lower balance. Individual schedule rows may differ by a cent depending on how a lender rounds interest and handles the final payment.

How a Simple Interest Schedule Works

In everyday loan discussions, “simple interest” often means interest is calculated on the outstanding principal rather than on previously accrued interest. For a monthly schedule, the period’s interest is generally the opening balance multiplied by the monthly rate. The payment first covers that period’s interest; the remainder reduces principal. As principal declines, the interest portion usually declines too.

The phrase can also refer to a different repayment arrangement: a simple-interest loan with equal principal installments or a balloon payment. Such loans do not necessarily have the level monthly payment calculated here. The calculator uses a specific, clearly stated model—a fixed rate and equal monthly payments—rather than every contract that might be described as “simple interest.” Check the loan disclosure or schedule to identify the lender’s actual method.

A useful way to read a schedule is to follow four figures for each period: opening balance, interest charged, payment, and closing balance. With a level payment, the closing balance is the opening balance plus interest minus payment. Small differences can arise from daily interest accrual, payment dates, rounding rules, or a changed rate.

When to Use This Estimate

Use the calculation to understand the approximate payment and interest for a hypothetical fixed-rate loan with monthly installments. It can also help explain why making a payment does not reduce principal by the full payment amount at the beginning of repayment. Enter the annual percentage rate supplied for the loan and the actual principal and term; any example default is only a sample input, not a market quote.

The results are not a complete lender-issued payment schedule. The calculator does not produce period-by-period dates or balances, and its total interest assumes every scheduled payment is made on time as modeled. To create a full schedule, calculate each period’s interest from that period’s opening balance, subtract it from the payment to find principal paid, and update the balance. Continue until the balance reaches zero, adjusting the last payment if necessary.

Common Misunderstandings and Limits

• Simple interest is not always a level-payment loan. The calculation here assumes equal monthly installments. A contract with equal principal payments, interest-only payments, or a final balloon amount needs a different schedule.
• APR and interest rate may not be interchangeable. The formula treats the input as a nominal annual rate divided by 12. Fees or other costs reflected in a disclosed APR are not separately modelled, so the computed payment may not match a disclosure that uses a different rate convention.
• Annual and monthly rates must not be mixed. The input is a percentage per year. The formula converts it to a monthly decimal by dividing by 1,200; entering a monthly rate as though it were annual will misstate the result.
• Rounding affects totals. This calculator rounds the payment to cents first, then multiplies that amount by the number of payments. A lender may use more precise internal values and adjust the last payment.
• Extra payments and timing changes matter. Additional principal payments, late payments, skipped payments, daily accrual, variable rates, and fees can change both payoff time and interest. None is included in this estimate.

Assumptions

• The interest rate stays fixed for the full term.
• Payments are equal monthly installments made at the end of each period.
• Interest compounds monthly at the annual rate divided by 12.
• The result excludes fees, taxes, insurance, PMI, escrow, and extra or missed payments.

Frequently Asked Questions

Is a simple interest payment the same every month?
Not necessarily. A fixed-payment amortization loan has equal scheduled payments, but other simple-interest arrangements may use different payment amounts. This calculator models equal monthly payments.

How do I calculate the interest part of a payment?
Multiply the balance at the start of the period by the monthly interest rate. For example, at 8% annually, a $20,000 opening balance accrues about $133.33 for one month before the payment is applied.

Does the whole payment reduce the loan balance?
No. Interest is charged for the period first; only the remaining portion of the payment reduces principal. Early in a level-payment schedule, that interest portion is generally larger than it is later.

Why might my lender’s payment differ?
The lender may use a different rate convention, payment dates, daily interest accrual, fees, or rounding rules. Compare the calculator’s assumptions with the loan disclosure, which states the contract’s figures and method.

Can I use this for a variable-rate loan?
Only as a snapshot for a period when the entered rate applies. If the rate changes, the payment schedule may be recalculated, so a single fixed-rate estimate will not describe the entire loan.

This result is an estimate for educational arithmetic; the lender’s disclosure gives the exact figures.

Related

• Interest Expense on a K-1: Where It Goes
• Interest and Payment Calculator for Fixed-Rate Loans
• How to Find r in Simple Interest

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