Quickly calculate interest earned on your savings or fixed deposits without compounding.
Simple interest is calculated only on the initial amount (principal) that you invest or borrow. Unlike compound interest, you don't earn interest on previously earned interest. It's often used for short-term loans or basic savings schemes.
I = P × R × T / 100
Simple Interest (SI) is the most straightforward method of calculating the cost of borrowing or the return on an investment. Unlike compound interest, which adds interest back to the principal for the next period, simple interest is calculated only on the original principal amount. Our Simple Interest Calculator is an ideal tool for students, small business owners, and anyone needing a quick interest estimate.
P = Principal, R = Annual interest rate, T = Time in years.
While most modern banking products (like FDs and Loans) use compound interest, simple interest is still widely used for: 1) Short-term loans between friends or family. 2) Automobile loans (certain types). 3) Late payment penalties. 4) Discounts on notes and bills of exchange. 5) Commercial paper and certain municipal bonds.
The main difference is 'Interest on Interest'. In simple interest, if you invest ₹100 at 10%, you earn ₹10 every year forever. In compound interest, in the second year, you earn 10% on ₹110, which is ₹11. Over long periods, compound interest will always far exceed simple interest. However, for periods of less than a year, the difference is often negligible, making SI a useful 'quick and dirty' math tool.
Three factors determine the SI amount: 1) Principal: The amount of money borrowed or invested. 2) Rate: The percentage of the principal charged as interest. 3) Time: The duration for which the money is used. In our calculator, you can enter time in years, months, or days to get the most precise calculation.
Small business owners often use simple interest to calculate the cost of Supplier Credit or short-term working capital. If a supplier offers a 2% discount for paying 30 days early, calculating the 'Implied Simple Interest' helps the owner decide if it's better to pay early or keep the cash in the bank.
Lending ₹1,50,000 for 2 years at a nominal rate.
Calculating interest on a 6-month ₹12 Lakh loan.
Simple Interest is a method of calculating interest on the original principal amount only, regardless of any previously earned interest.
Formula: SI = (P × R × T) / 100, where P is Principal, R is Rate of interest per annum, and T is Time in years.
Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus any accumulated interest.
It's commonly used for short-term personal loans, car loans (sometimes), and for calculating interest on overdue payments.
Divide the number of months by 12 to convert it to years for the standard formula.
Principal is the initial amount of money borrowed or invested, before any interest is added.
Yes. Formula: R = (SI × 100) / (P × T).
The 'Amount' refers to the total maturity value, which is the sum of the Principal and the Simple Interest earned (A = P + SI).
No. Most banks in India use compound interest for FDs and savings accounts. However, some agriculture loans still use simple interest.
Divide the number of days by 365 (or 366 for a leap year) to find the time fraction 'T'.