Enter any loan amount, rate, and term to instantly see total interest paid, monthly cost, and a year-by-year growth chart. Then understand why Islamic finance calls this riba — and what the halal alternative looks like.
A = P(1 + rt)
Formula
$735K interest
$350K at 7% over 30 yrs
Musharakah
Halal alternative
Drag the slider to your loan amount — mortgage, car loan, student loan, or any debt. Range: $10K to $2M.
Enter the annual interest rate quoted by your lender. The calculator converts it to a decimal automatically.
Choose how many years you'll be paying. 30 years for mortgages, 5–7 for cars, 10–25 for student loans.
The chart and stats bar instantly show total amount, total interest, monthly interest, and your riba burden at a glance.
A = P(1 + r × t)
Total Amount = Principal × (1 + Rate × Time)
A
Total Amount
What you repay in full — principal plus all interest.
P
Principal
The original loan amount you borrowed.
r
Annual Rate
Interest rate as a decimal. 7% becomes 0.07.
t
Time (years)
Number of years the loan runs.
You pay back more than 3× the original loan. For every $1 borrowed, $2.10 goes to the lender in interest alone. This is the structure Islam calls riba.
Riba — from the Arabic root meaning "to increase" — refers to any predetermined, guaranteed financial return on a loan or transaction. In the Quran (2:275–279), riba is described as unjust and is explicitly forbidden. The prohibition covers both simple and compound interest: the structure is haram regardless of the rate.
Islamic scholars identify two primary harms of riba. First, it allows money to generate money without any real economic activity or risk-sharing — the lender profits regardless of whether the borrower succeeds or fails. Second, it concentrates wealth over time: the longer a debt runs, the more the lender extracts, and the harder it becomes for the borrower to escape. The simple interest chart in this calculator makes that extraction visible in a single glance.
The lender receives interest whether the borrower's business succeeds or fails. Islamic finance requires both parties to share risk and reward.
In Islamic economics, money is a medium of exchange, not a commodity with intrinsic value. It should not generate more money purely through time.
Interest compounds wealth upward and debt downward. Over 30 years, a $350K borrower pays $735K extra — $735K the lender collects without lifting a finger.
The bank and buyer co-own the property from day one. The buyer pays monthly: part rent (for the bank's share of the home) and part purchase (buying out the bank's equity). As ownership shifts to the buyer, the rent component decreases. No interest is charged — the bank earns rental income on a real asset it actually owns. Most US Islamic mortgage providers use this model.
The bank purchases the asset outright, then sells it to the buyer at a disclosed, agreed markup payable in installments. The total cost is fixed at contract signing — it cannot increase if payments are late. The profit element is a trade markup, not interest. Murabaha is widely used for auto financing, equipment purchase, and commodity financing in the US.
The bank purchases the asset and leases it to the buyer for an agreed period. At the end of the lease, ownership transfers — either through a gift, purchase at nominal value, or gradual buy-out. The monthly payment is rent, not an interest payment. Ijara is Sharia-compliant because the bank bears ownership risk: if the asset is destroyed, the bank absorbs the loss.
Any predetermined, guaranteed return on a loan. Explicitly prohibited in the Quran (2:275–279). Covers both simple and compound interest — the structure is haram regardless of the rate or label used.
The original amount borrowed before any interest. In simple interest, all interest is calculated solely on this figure — it never compounds on itself.
Interest calculated only on the principal. Formula: I = P × r × t. Growth is linear. Less harmful than compound interest but still constitutes riba in Islamic law.
Interest calculated on the principal plus all previously accumulated interest. Causes exponential debt growth. The standard model for US mortgages, credit cards, and student loans.
Diminishing partnership. Bank and buyer co-own an asset; buyer gradually purchases bank's share. Rent decreases as ownership transfers. The most common US Islamic mortgage model.
Cost-plus financing. Bank buys an asset and sells it at a disclosed markup. Total cost is fixed at contract signing. Used for auto, equipment, and short-term financing.
Simple interest is calculated as A = P(1 + r × t), where P is the principal (starting amount), r is the annual interest rate as a decimal, and t is the time in years. The interest portion alone is I = P × r × t. For example, a $350,000 loan at 7% for 30 years accrues $735,000 in simple interest — making the total repayment $1,085,000.
Simple interest is calculated only on the original principal — it never grows on itself. Compound interest is calculated on the principal plus all previously accumulated interest, causing the debt to snowball over time. A $350,000 loan at 7% compounded monthly (standard mortgage) costs far more than the same loan at simple interest. Most conventional loans use compound interest, which is one reason Islamic finance considers them particularly harmful.
Riba — broadly translated as interest or usury — is explicitly prohibited in the Quran (2:275–279). Islamic scholars identify two core reasons: (1) Money itself has no intrinsic value and should not generate more money simply through the passage of time. (2) Interest transfers risk entirely to the borrower, creating systematic inequality. Islamic finance replaces interest with profit-sharing, co-ownership, and cost-plus models where risk is shared between all parties.
The majority scholarly opinion is that all forms of riba — including simple interest — are prohibited regardless of the rate. The prohibition is on the structure, not the amount. A small interest rate is not 'halal enough.' However, there is a minority scholarly view that distinguishes between riba al-fadl (excess in exchange) and riba al-nasi'ah (interest over time), and some contemporary scholars debate modern financial instruments. For guidance specific to your situation, consult a qualified Islamic scholar.
In a Musharakah (diminishing partnership) arrangement, the bank and buyer co-own the property. The buyer gradually purchases the bank's share over time while paying 'rent' on the portion still owned by the bank. As ownership shifts, the rent decreases. Unlike a simple or compound interest loan, Musharakah involves no predetermined interest — the profit element is a rental payment for actual use of the bank's share of a real asset. The total cost may be similar in dollar terms, but the structure is fundamentally different.
Yes. This calculator applies the simple interest formula A = P(1 + rt) to any loan type. Enter your loan amount as P, the annual interest rate as r, and the loan term in years as t. Note that most mortgages and car loans actually use compound interest (amortization), so this calculator gives you a simplified view. For a full amortization comparison with Islamic financing, use our Halal Mortgage Calculator.
Riba is the Islamic legal term for any predetermined, guaranteed return on a loan or financial transaction — most commonly translated as 'interest' or 'usury.' For the 4.5 million Muslims in the US, riba is a daily financial challenge: conventional mortgages, car loans, credit cards, and student loans all involve riba. Islamic finance offers Sharia-compliant alternatives — Musharakah mortgages, Murabaha auto financing, and halal investment accounts — that allow American Muslims to participate in the financial system without violating their faith.
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Read the guideThis calculator uses the simple interest formula A = P(1 + rt) for educational purposes. Most conventional mortgages use compound (amortized) interest, which results in higher total costs. Results are estimates only — not financial or legal advice. Islamic finance rulings vary by scholar and madhab. Consult a qualified Islamic scholar for guidance specific to your situation.