Simple Loan Calculator With Amortization Schedule

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 Payment:

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1. What is a Simple Interest Loan?

A simple interest loan calculates interest only on the principal amount throughout the loan term, unlike compound interest loans where interest accumulates on both principal and accrued interest.

2. How Does the Calculator Work?

The calculator uses these 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)
\( t \) — Loan term in years
\( n \) — Number of monthly payments (\( t \times 12 \))

3. Understanding Amortization

Details: The amortization schedule shows how each payment is split between principal and interest, and how the loan balance decreases 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. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is simple interest different from compound interest?
A: Simple interest is calculated only on the original principal, while compound interest is calculated on principal plus accumulated interest.

Q2: Are car loans simple interest loans?
A: Most auto loans are simple interest loans, where daily interest is calculated based on the current balance.

Q3: Why does my payment stay the same each month?
A: Simple interest loans typically have fixed monthly payments, though the portion going to principal increases over time.

Q4: What happens if I pay extra each month?
A: Additional payments reduce the principal faster, decreasing total interest paid and potentially shortening the loan term.

Q5: Where are simple interest loans commonly used?
A: They're often used for auto loans, personal loans, and some mortgages (especially in certain countries).