**Simple interest** denotes the amount estimated from the principal amount of any loan taken from a bank or the initial contribution of any bankâ€™s saving account. The calculation process of evaluating simple interest is easy. Using **Microsoft Excel**, we can do this task more efficiently. In this context, we will show you **three** suitable examples of building a simple interest loan calculator using Excel formula. If you are curious about it, download our practice workbook and follow us.

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## What Is Simple Interest?

**Simple interest** denotes the amount estimated from the principal amount of any loan taken from a bank or the initial contribution of any bankâ€™s saving account. We can also say the amount of interest that gains directly from the principal amount. The mathematical expression of simple interest is:

**I = P Ă— R Ă— n**

Where,

**I**= The amount of gained interest from the principal amount.**P**= Principal amount**R**= Annual rate of interest**n**= Number of period

Letâ€™s take a look at a simple example of simple interest.

A person **X** deposits **$5,000** in his bank account. The bank will provide **5%** interest on this capital annually. Now, if he keeps his money in that account for **2** years the amount of simple interest will be,

Simple interest,** I = 5000 Ă— 0.05 Ă— 2 **

**Â Â Â Â = 500**

## 2 Suitable Examples to Build Simple Interest Loan Calculator with Excel Formula

In this article, we are going to show you **two** distinct approaches to building a simple interest loan calculator using Excel formula. First, we will estimate the amount of simple interest by a **conventional formula**, and second, by using **Excelâ€™s built-in functions**.

### 1. Applying Conventional Formula

Here, we are going to demonstrate **two** examples. In the first example, we will perform the process to get the value of **simple interest** using the main formula. Then, in the second example, we will display how to use the main formula when the time is in months instead of years.

#### 1.1 Simple Interest for Year

In the following example, we will estimate the value of simple interest. We consider that a person **Mr. X** invests in a bank account of **$15,000** for **5** years. The bank authority will provide him with an annual rate of **5%** interest. The steps to complete the procedure are given below.

**đź“Ś Steps: **

- At first, input all the required particulars in the range of cells
**D5:D7**.

- After that, select cell
**D9**and write down the following formula into the cell.

`=D5*D6*D7`

- Press
**Enter**.

- You will get the value of
**simple interest**based on the principal amount. - In addition, we will also calculate the total amount after the time period.
- For that, write down the following formula into cell
**D10**.

`=D5+D9`

- Again, press
**Enter**.

- You will get the value of
**grand total**and our task finished.

Thus, we can say that our formula worked perfectly, and we are able to build a simple interest loan calculator using the Excel formula.

#### 1.2 Simple Interest for Month

In this example, we will evaluate the value of simple interest for some month periods. We are considering that person **Mr. X** invests in a bank account of **$15,000** for **20** months. The bank authority will provide him with an annual rate of **5%** interest. The steps of this process are given as follows:

**đź“Ś Steps: **

- First of all, input all the required particulars in the range of cells
**D5:D7**.

- Now, convert the month period into the year.
- For that, write down the following formula into cell
**D8**.

`=D7/12`

- Press
**Enter**.

- Then, select cell
**D10**and write down the following formula into the cell.

`=D5*D6*D8`

- Again, press
**Enter**.

- Within a second, you will get the value of
**simple interest**based on the principal amount. - Moreover, we will also calculate the total amount after the time period.
- For that, write down the following formula into cell
**D11**.

`=D5+D10`

- Press
**Enter**for the last time.

- You will get the value of
**grand total**and our task is completed.

Finally, we can say that our formula worked successfully, and we are able to build a simple interest loan calculator using the Excel formula.

### 2. Using PMT, IPMT and PPMT Functions

In this method, we are going to use the **PMT**, **IPMT**, and **PPMT** functions to build a simple interest loan calculator. Our people **Mr. X** takes a loan of **$15,000** from a bank for a year. He has to pay an annual rate of **12%** interest on the loan. The procedure of this method is given below step by step:

**đź“Ś Steps:**

- First, input all the required particulars in the range of cells
**D7:D9**.

- Now, select cell
**D10**and write down the following formula in the cell to get the value of the number of installment periods.

`=D9*12`

- Press
**Enter**.

- After that, to get the loan payment sheet, create a dataset as shown in the image.
- Then, write down the total number of periods from
**1-12**.

- After that, in cell
**G6**, write down the following cell reference.

`=D7`

- Again, press
**Enter**.

- Now, write down the following formula in cell
**H6**to get the value of**EMI**.

`=PMT($D$8/12,$D$10,$D$7)`

- Press
**Enter**to get the value.

- Afterward, in cell
**I6**, write down the following formula to get the value of**interest**.

`=IPMT($D$8/12,F6,$D$10,$D$7)`

- Similarly, press
**Enter**.

- Then, to get the value of the principal amount, we will use
**the PPMT function**. Using this function, write down the following formula in cell**J6**.

`=PPMT($D$8/12,F6,$D$10,$D$7)`

- Press
**Enter**.

- At last, write down the following formula to get the value of the
**closing balance**in cell**K6**.

`=G6+J6`

- Press
**Enter**.

- Now, the closing balance of period
**1**will be the opening balance of period**2**. So, to get the complete value, write down the following cell reference in cell**G7**.

`=K6`

- Press the
**Enter**.

- After that, select the range of cells
**H6:K6**and**drag**the**Fill Handle**icon to copy the formula up to row**7**.

- Then, select the range cells
**G7:K7**and**double-click**on the**Fill Handle**icon to copy the formula up to period**12**. - At last, you will see the
**closing balance**of period**12**is**0**, which means that we have successfully cleared our loan.

- Moreover, we can also calculate the total amount of
**EMI**,**interest**, and**principal amount**to check the accuracy of our payment sheet. - For that, we will use
**the SUM function**. - Now, write down the following formula in cell
**H18**to get the total of**EMI**.

`=SUM(H6:H17)`

- Press
**Enter**for the last time.

- Then,
**drag**the**Fill Handle**icon to your right to copy the formula up to cell**J18**. - Our simple interest loan calculator is ready to use.

In the end, we can say that all of our functions and formulas worked perfectly, and we are able to build a simple interest loan calculator using the Excel formula.

## Conclusion

Thatâ€™s the end of this article. I hope that this article will be helpful for you and you will be able to build a simple interest loan calculator using Excel formula. Please share any further queries or recommendations with us in the comments section below if you have any further questions or recommendations.

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