Simple Interest Calculator
Calculate simple interest on loans or investments quickly and accurately.
How the Simple Interest Calculator works
Use the Simple Interest Calculator to determine the interest earned or paid on a principal amount. Enter the 'Principal' amount. This is the initial sum of money. Input the 'Rate (% p.a.)'. This is the annual interest rate as a percentage. Enter the 'Time (years)'. This is the duration for which the money is borrowed or invested.
The calculator will compute the simple interest using the formula: Principal × Rate × Time ÷ 100. It will also show the total amount, which is the principal plus the calculated interest. Use this tool for quick calculations on various financial scenarios.
Formula used
SI = P × R × T ÷ 100
| Symbol | Meaning |
|---|---|
| P | principal |
| R | annual rate (%) |
| T | time in years |
Simple interest is charged only on the original principal, so the yearly interest stays identical for the whole tenure. Most short-term loans and informal lending use this method.
Inputs used: Principal, Rate (% p.a.), Time (years).
Worked example
Here is a worked example with specific numbers.
- Enter 100,000 in the 'Principal' field.
- Enter 8 in the 'Rate (% p.a.)' field.
- Enter 3 in the 'Time (years)' field. The calculator shows the interest as 24,000 and the total amount as 124,000.
Result:
- Interest: 24,000
- Total amount: 124,000
Frequently asked questions
- What is simple interest?
- Simple interest is calculated only on the principal amount. It does not compound, meaning interest is not earned on previously accumulated interest.
- How do you calculate simple interest?
- Simple interest is calculated using the formula: Principal × Rate × Time ÷ 100. The rate must be an annual percentage, and time must be in years.
- What is the difference between simple and compound interest?
- Simple interest is calculated only on the original principal. Compound interest is calculated on the principal amount and also on the accumulated interest from previous periods.
- What formula does the Simple Interest Calculator use?
- It uses SI = P × R × T ÷ 100, where P is the principal; R is the annual rate (%); T is the time in years.
- How do I read the result?
- Simple interest is charged only on the original principal, so the yearly interest stays identical for the whole tenure. Most short-term loans and informal lending use this method.