A simple interest calculator helps you estimate the interest earned or paid on a principal amount over a specific time period. By entering the principal amount, interest rate, and time period, you can instantly calculate the simple interest and total amount. This tool is essential for understanding basic interest calculations on loans, savings, and investments.
The simple interest is calculated using the formula:
Simple Interest = (P × R × T) / 100
Total Amount = Principal + Simple Interest
Where:
Simple interest is a method of calculating interest where interest is computed only on the original principal amount throughout the investment or loan period.
Simple interest is calculated only on the principal amount, while compound interest is calculated on both principal and accumulated interest.
Simple interest is commonly used in car loans, short-term personal loans, and some savings accounts.
Simple interest is easy to calculate, predictable, and beneficial for borrowers as it results in lower total interest compared to compound interest.
Simple interest results in lower returns for investors compared to compound interest and doesn't maximize earning potential.
Banks use the formula: Simple Interest = (Principal × Rate × Time) / 100 to calculate interest on certain products.
Yes, simple interest can be calculated for partial years by expressing the time period as a fraction of a year.
Simple interest is generally better for borrowers as it results in lower total interest payments compared to compound interest.
With simple interest loans, early payments primarily reduce principal, leading to decreased interest charges over time.
Certain bonds, certificates of deposit (CDs), and short-term loans use simple interest calculations.