Simple interest is interest that is calculated as a percentage of the original value of a loan or investment.

It doesn't take any additional payments, deposits, interest earned or interest paid into account.

For example, if Gus borrows \(\$2000\) for 5 years at a simple interest rate of \(5\%\), he will pay a total of \(5 \times \dfrac{5}{100} \times \$2000 = \$500\) interest.

The same amount (\(\$100)\) of interest is paid each year, regardless of any repayments that Gus might make.