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.

A simple technique to convert a lease's finance chart into a more meaningful annual interest rate.

Experts at Carleton acknowledged calculating add-on interest isn’t as prevalent as it once was with finance companies and other lenders using simple-interest calculations more often nowadays.