Simple Interest Calculator

What is Simple Interest?

Simple Interest (SI) is a basic method of calculating the interest charge on a loan or investment. It is calculated only on the original principal amount and does not include interest earned in previous periods (unlike compound interest).

How Simple Interest is Calculated

The formula for Simple Interest is straightforward:

SI = (P × R × T) / 100

Where:

• P = Principal Amount (the initial amount of money)
• R = Annual Interest Rate (in percentage)
• T = Time Period (in years)

The Total Amount payable or receivable at the end of the period is the sum of the Principal and the Simple Interest (Total Amount = P + SI).

Where is Simple Interest Used?

• Often used for short-term loans like auto loans or personal loans (though many use compound interest too).
• Some basic savings accounts or short-term deposit schemes might offer simple interest.
• It serves as a fundamental concept for understanding more complex interest calculations like compound interest.

Disclaimer: This calculator provides a basic calculation of simple interest. Financial institutions may use different calculation methods or frequencies. Always verify terms and conditions with the provider. For investment growth, compound interest typically yields significantly higher returns over the long term.