Simple Interest Calculator

Understanding Simple Interest

What is Simple Interest?

Simple interest is calculated only on the original principal amount throughout the loan term. Unlike compound interest, it doesn't account for accumulated interest.

The Simple Interest Formula

I = P × R × T
Where:
I = Interest amount
P = Principal amount (initial loan/investment)
R = Annual interest rate (in percentage)
T = Time period (in years)

Example Calculation

For ₹10,000 at 6% for 2 years:
I = 10,000 × (6/100) × 2 = ₹1,200 interest
Total Amount = 10,000 + 1,200 = ₹11,200

When is Simple Interest Used?

• Short-term personal loans
• Some types of car loans
• Certificates of Deposit (CDs)
• Some savings accounts

Key Characteristics

• Interest doesn't compound over time
• Easier to calculate than compound interest
• Common for loans under 1 year
• Total interest is predictable