Simple Interest Calculator
Calculate simple interest on loans and investments instantly. Find interest amount, total amount, and analyze your financial returns with ease.
Simple Interest Calculator
How to Use This Calculator
Enter the Principal amount (initial amount), Rate of interest (percentage per year), and Time period (in years). The calculator will compute the simple interest earned and the total amount (Principal + Interest).
Simple Interest Formula
The formula for simple interest is: SI = (P ร R ร T) / 100, where P = Principal amount, R = Rate of interest per annum, and T = Time period in years. Total Amount = P + SI. This straightforward formula makes calculations easy and predictable.
Understanding Simple Interest
Simple interest is calculated only on the principal amount throughout the loan or investment period. Unlike compound interest, it doesn’t account for interest on previously earned interest. This makes it simpler to calculate but typically yields lower returns for investments.
Common Applications
Simple interest is used in short-term loans, car loans, some personal loans, and certain investment products. It’s also useful for quick financial estimates, educational purposes, and understanding basic interest concepts before moving to compound interest calculations.
Simple vs Compound Interest
Simple interest remains constant over time, while compound interest grows exponentially as interest is calculated on accumulated interest. For long-term investments, compound interest yields significantly higher returns. For short-term loans, simple interest is often more favorable to borrowers.
Frequently Asked Questions
Q: Can time be in months? A: Yes, convert months to years (divide by 12). Q: What if rate changes? A: Calculate separately for each period. Q: Is simple interest better? A: For borrowers yes, for investors no. Q: How to calculate monthly interest? A: Divide annual rate by 12.