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Simple Interest Loan Calculator
Most auto loans and many personal loans use simple interest — interest accrues daily on the current balance. This calculator computes the scheduled payment, total cost, and how extra payments reduce interest and shorten the term.
Scheduled monthly payment
$516
Scheduled total paid
$24,790
Scheduled interest
$6,290
Months to payoff (with extras)
3 yr 6 mo
Actual interest (with extras)
$2,915
Interest saved by extras
$3,375
How the math works
Simple-interest loans charge interest on the current balance at each payment date. Paying early reduces the balance, which reduces the next month's interest. Unlike amortized loans, extra principal directly accelerates payoff without restructuring the schedule.
Most auto loans, some personal loans, and some business loans use this structure. Read the note — it may say "simple interest" explicitly. Make the distinction: simple-interest with monthly compounding (common) is different from pure simple-interest amortization.
How to Use
- Enter principal, rate, and term in months.
- Enter extra monthly payment if applicable.
- Read scheduled monthly, total interest, and savings from extras.
Frequently Asked Questions
What's the formula?
Simple interest = Principal × Rate × Time. A $20k loan at 8% for 3 years: 20,000 × 0.08 × 3 = $4,800 total interest. Monthly payment = (20,000 + 4,800) ÷ 36 = $688.89.
How do extras save interest?
Extra payments reduce the balance earlier, which reduces every future month's interest accrual. $50 extra per month on a typical 5-year auto loan saves several hundred dollars and shortens term 4-6 months.
Are there prepayment penalties?
Some simple-interest loans carry prepayment penalties (especially subprime). Most mainstream auto loans don't. Always check the note before making large lump-sum prepayments.
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