This calculator takes the principal, the rate, and the time, and returns the interest plus the total to repay. Use it before you agree to borrow or lend, so the cost is clear to both sides and can be written into the agreement in plain numbers.
How it is calculated
I = P × r × t (total to repay = P + I)
I is the interest charged over the whole period.
P is the principal — the amount lent.
r is the interest rate per period, as a decimal. 2% per month is 0.02.
t is the number of periods. The rate and the time must use the same unit: if the rate is per month, count months; if per year, count years.
The borrower repays P + I — the original amount plus the interest.
Example
A friend lends you 50,000 THB at 2% per month, to be repaid after 6 months. Interest is I = 50,000 × 0.02 × 6 = 6,000 THB, so you repay 56,000 THB in total.
Notice what that monthly rate really means: 2% per month equals 24% per year in simple interest — far higher than most bank loans. Running the numbers first often changes the conversation about the rate.
Understanding your result
Write both numbers into the loan agreement: the principal and the interest (or the rate and how it is charged). Stating “50,000 THB plus 6,000 THB interest, repaid as 56,000 THB by 31 December” leaves nothing to interpret.
Always record whether the rate is per month or per year. A large share of informal-loan disputes trace back to exactly this ambiguity.
Many countries cap the interest that private lenders can charge. If the calculated rate seems steep, check the legal limit where you live before signing anything.
Frequently asked questions
What does 2% per month mean per year?
In simple interest, 2% per month is 24% per year — just multiply by 12. If the interest compounds monthly instead, the effective annual cost is higher, about 26.8%. Always confirm which method the lender means.
What is the difference between simple and compound interest?
Simple interest is always calculated on the original principal, so the charge is the same every period. Compound interest is calculated on the principal plus interest already accrued, so the debt grows faster over time. Informal loans usually use simple interest; savings accounts and many bank products compound.
Is there a legal limit on interest for personal loans?
In many countries, yes — including Thailand, where the law caps the rate private lenders can charge on loans between individuals. The cap and the consequences of exceeding it vary by country, so check the rules where you live before agreeing to a rate.
How do I calculate simple interest for a partial period, like 45 days?
Convert the rate to a daily figure and multiply by the days. At 24% per year, the daily rate is 0.24 ÷ 365, so 45 days on 50,000 THB is 50,000 × 0.24 ÷ 365 × 45 = 1,479.45 THB. For monthly rates, a common convention is rate × days ÷ 30.
Should the interest be written into the loan agreement?
Yes, always. State the rate, whether it is per month or per year, how it is calculated, and the total expected repayment. An agreement that only says “plus interest” invites disagreement later — precise numbers protect the friendship as much as the money.
Can I use this calculator for an interest-free family loan?
You do not need a formula for zero interest — the repayment simply equals the principal. But a written record still matters: it fixes the amount, the repayment date, and proves the money was a loan rather than a gift.
Results are estimates for general information only and may differ from a lender's exact figures. They are not financial or legal advice.