Simple Interest Calculator Nigeria — Flat Rate Loan & Savings
Calculate simple (flat rate) interest on loans or savings. Shows interest amount, total repayment and the full formula. Nigerian naira.
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% p.a.
years
Quick amounts:
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Interest Amount
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Total Amount (A = P + I)
₦0
Daily Interest
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Monthly Interest
Formula
I = P × R × T
Interest Accumulation
| Period | Interest This Period | Cumulative Interest | Total Balance |
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Simple Interest Formula Explained
I = P × R × T — Interest = Principal × Rate × Time
A = P + I — Total Amount = Principal + Interest
Note: Simple interest does not compound. ₦1,000,000 at 15% for 3 years earns exactly ₦450,000 interest regardless of when it's calculated — unlike compound interest which earns interest on interest.
Frequently Asked Questions
What is simple interest?
Simple interest is calculated only on the original principal amount, not on accumulated interest. Formula: I = P × R × T, where P is principal, R is annual rate (decimal), and T is time in years. It is straightforward and used for short-term loans and some savings products.
What is the difference between simple and compound interest?
Simple interest applies the rate only to the original principal every period. Compound interest applies the rate to the growing balance (principal + accumulated interest). Over time, compound interest grows much faster. Most Nigerian bank loans use reducing balance (compound), while some hire-purchase and informal lenders use flat (simple) rates.
When is simple interest used in Nigeria?
Simple (flat rate) interest is common in hire purchase agreements, some cooperative loans, daily contribution (ajo/esusu) calculations, and short-term money lending. Always clarify whether a lender uses flat or reducing balance — they produce very different total costs.
How do I convert a flat rate to effective rate?
A flat rate of 10% p.a. over 24 months is equivalent to roughly 18–19% reducing balance. The formula is: Effective Rate ≈ 2 × n × flat rate / (n + 1), where n is the number of payment periods. Always compare loans on an effective/reducing balance basis.
Can I use this for savings interest calculations?
Yes. If a bank offers simple interest on a savings account or fixed deposit, enter the principal, rate, and duration. For products that compound interest (most fixed deposits), use the Fixed Deposit Calculator instead.