Finance

Travel Simple Interest Total Calculator (20 Years)

Calculate simple interest and the total amount to repay. This travel version uses a 20-year planning term as its starting point.

The Interest figure is the total cost of borrowing over 20 years, and the Total figure is the principal plus that Interest, which is the full amount to repay by the end of the term.

Formula

Simple interest equals principal times rate times time, divided by 100.

How it works

Interest is charged only on the original principal, not on interest already added.

Worked example

Principal $10,000, annual rate 5 percent, time 20 years. Simple interest is charged only on the original principal, so each year adds 5 percent of $10,000, which is $500. Over 20 years the interest is 20 times $500, which is $10,000. The total amount to repay is the principal plus the interest, $10,000 plus $10,000, which is $20,000. That is the calculator's own result for these defaults, and it follows directly from the page formula: principal times rate times time, divided by 100.

Who this term suits for a traveller: a traveller taking a very long view, such as a holiday home bought for decades of use, where the interest equals the amount borrowed and the decision is really about the total of $20,000, not the $500 a year.

FAQs

What is simple interest?
Simple interest is interest charged only on the original amount, not on accumulated interest.

Is this travel calculator exact?
No, it is an estimate for planning only, based on the numbers you enter.

Are these figures financial advice?
No, they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

Why does the interest equal the $10,000 principal at 20 years?
At $500 a year, 20 years of interest is 20 times $500, which is exactly $10,000, the same as the amount borrowed. That is the point where the traveller has paid for the trip twice over: $10,000 of principal plus $10,000 of interest, a total of $20,000.

Is a 20-year travel loan sensible when interest doubles the cost?
Only if the purchase itself lasts and earns its keep for 20 years, such as a holiday home used every season. For an ordinary trip it is not sensible: paying $20,000 for a $10,000 trip means the interest has become as large as the holiday itself.

What if the rate rises to 7 percent over 20 years?
At 7 percent the yearly interest on $10,000 is $700, so 20 years cost $14,000 and the total repaid is $24,000 instead of $20,000. A 2-point rise in the rate adds $4,000 over 20 years, which is why a long loan is far more sensitive to the rate than a short one.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.