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How do I calculate simple interest monthly?

wikiHow Staff Editor
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This answer was written by one of our trained team of researchers who validated it for accuracy and comprehensiveness.

wikiHow Staff Editor

Staff Answer

Calculate the simple interest, then divide the result by the number of months covered by the period of the loan. For instance, if it’s a 1-year loan, divide the interest by 12. For a 2-year loan, divide it by 24, and so on.

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How do you calculate simple interest with a calculator?

wikiHow Staff Editor
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This answer was written by one of our trained team of researchers who validated it for accuracy and comprehensiveness.

wikiHow Staff Editor

Staff Answer

Use the simple interest formula. Enter the amount of the principal (P), then multiply it by the interest rate (r) in decimal form. Multiply the result by the time period of the loan (t) to calculate the interest.

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Why do we calculate simple interest?

wikiHow Staff Editor
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wikiHow Staff Editor

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Calculating simple interest will help you understand your monthly payments on a loan. If you pay your interest in full each month on a simple interest loan, you can keep it from accruing and causing your loan to get much bigger.

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Question

If I borrow $115,000 at 6.5% simple interest, how would I calculate my payment?

wikiHow Staff Editor
Staff Answer
This answer was written by one of our trained team of researchers who validated it for accuracy and comprehensiveness.

wikiHow Staff Editor

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Start by calculating the interest using the simple interest formula. Here, you would multiply the principal ($115,000) by the rate (0.065) and the number of years for your loan (which you haven't provided. This tells you the amount of interest you'll pay. Add that to the principal to get the total amount you'll pay over the life of the loan, then divide that amount by the number of payments you'll make. For example, if your loan is for 10 years and you're making monthly payments, you would divide the total amount by 120 (10 years x 12 months in each year).

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A loan is $30,000 and the pay back is $35,000 over a two-year period. What are my monthly payments and what is the interest rate?

wikiHow Staff Editor
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This answer was written by one of our trained team of researchers who validated it for accuracy and comprehensiveness.

wikiHow Staff Editor

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To determine your monthly payment, divide $35,000 by 24 (the number of months in 2 years). To determine the interest rate, divide the interest ($3,000) by the product of the principal ($30,000) times the years (2).

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If I put $1500 into my savings account and earned $180 interest at 4% simple interest, how long was my money in the bank?

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It was in the bank for 3 years.

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Question

Is there a simple formula for simple interest?

Sri356

Community Answer

(P×T×R)/100

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Question

How can calulate simple interest if p=8000, r=11%, t=73 days?

Sri356

Community Answer

(8000×11×73)/(100×365)

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How can I calculate the interest payment for each month?

Ankita95

Community Answer

Total Loan Amount * Rate of Interest/100 * 1/12. Here 1 denotes a month. So, basically if you want to calculate interest for two months, then replace 1 with 2 in the above formula.

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Question

If the principal is $500, and the annual interest rate is 8%, how much is the first interest payment?

Donagan

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If the payments are monthly, simple interest is calculated by multiplying the outstanding principal by one-twelfth of the annual interest rate.

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Question

When calculating simple interest, do I use the current principal, or the original amount borrowed?

Rtao

Community Answer

For simple interest, use the original amount borrowed.

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Question

What is compound interest?

Community Answer

It is interest calculated on a principal which has been increased by previous interest payments. Essentially it's "interest on interest."

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Question

Why is interest calculated in months and not in years?

Jasmine Tipping

Community Answer

The money being lent may not necessarily take a year to pay back. If someone was lent say $300 even with an interest rate, it may only take months for them to pay it back. With interest calculated monthly, it can be more accurate, otherwise you would have a large amount of interest being paid on a small/large amount of money each year, giving a lump sum that someone couldn't possibly pay within the time given by the bank or loaner.

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Question

If I have $120 in my savings account and I get 0.25% interest for the first month, how much will I earn in interest?

Risto Mononen

Community Answer

The savings are multiplied by 1.0025 every month. In a year it would make $120 x 1.0025 ^ 12. You didn't specify the savings time though; replace 12 with the number months you are saving.

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Is per annum interest simple or compounded?

Rajendra Chataut

Community Answer

That depends upon the policy of the financial institution .

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How long will it take for R5000 invested at 10% per annual simple interest to grow to R7000?

Community Answer

It would take 14 months.

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Question

How do I calculate rate of interest?

Donagan

Top Answerer

An annual rate of simple interest is calculated by dividing the total amount of interest paid in a year by the amount borrowed.

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Question

If I invest 35 lakhs for 30 years at 8% interest, how do I calculate monthly interest?

Donagan

Top Answerer

Multiply principal (35) by interest rate (.08) by time (one month, which is 1/12 or 0.125 of a year): (35)(.08)(0.125) = 0.35 lakh. (The 30 years is irrelevant.)

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Question

Can I reduce payments based on interest calculations?

Community Answer

Yes. You can reduce payments on simple interest loans, but it depends on whether or not additional payments are being added to principal.

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Question

How do I find out interest on a loan?

Community Answer

Talk to your bank about it, they will know. Typically when you take out the loan they will tell you what the interest will be.

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How many years would it take for 3500 to earn 525 simple interest at rate of 5% per annum?

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It will take 3 years to earn 525 simple interest at the rate of 5% per annum.

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I want to double my investment in ten years. What interest rate do I need to accomplish this?

Donagan

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You need a compound interest rate of approximately 7.2%.

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Question

How do I find the simple interest rate in I = prt?

Donagan

Top Answerer

"r" is the simple interest rate per year. "p" is the principal amount. "t" is the amount of time involved, expressed in years. "I" is the amount of interest earned during the specified time period. Solving the equation for "r," r = I / pt.

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Question

If there is no amount, principal, or simple interest given, how can I find the answer?

Community Answer

If there is no amount, principal, or simple interest given, then it is impossible to calculate because it is the amount, principal, and time that bring about the interest.

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If a loan is for 30 months at 9% interest per year on a $22,000 loan, how much is the principal?

Donagan

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$22,000.

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How can I calculate interest given a percentage rate and time of investment?

Donagan

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Interest = principal, multiplied by interest rate, multiplied by time.

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How can I calculate the principal?

Donagan

Top Answerer

If you're dealing with an annual rate of interest, divide the total interest paid in a year by the interest rate.

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Can compound interest be calculated using a simple interest formula?

Donagan

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No. Figuring compound interest involves a more complicated formula.

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Question

What do I owe if I borrowed $2,100.00 at 6% for three months?

Donagan

Top Answerer

If the interest rate is quoted for a three-month period, the simple interest would amount to $126. If it's an annual rate, the simple interest for three months would be $31.50.

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Will paying more toward the principle each month save me money?

Donagan

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Yes it will save you in the long run.

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