How Simple Interest Works: An Example Suppose you take out a $5,000 loan at 6% interest for two years. To calculate the amount of interest you will pay, use the simple interest formula above.

Curious about how the interest on your loan works? Learn how interest rates are determined and how to calculate interest on a loan yourself.

Calculate APR from simple interest rates by extending or reducing the time period to a single year. For example, a CD may offer 1.5 percent simple interest over a three-month period.

How To Calculate Simple Interest on a CD Simple interest is the interest rate without compounding, meaning it’s applied just once and only to the principal.

To calculate per-diem interest, take the interest rate (be sure to express it as a decimal, so 10% becomes 0.10) and divide by 365 to determine the daily interest rate.

Calculate mortgage APR using your interest rate, discount points and other fees through this calculator.

Learn how to calculate the Simple Interest in Excel either for a single entry or a range or entries, between two dates, using this forumula.

While simple interest is generally simple to calculate over the life of a loan or investment, it can also be useful to know how much interest is accruing on a daily, or "per-diem," basis.