Simple Interest Calculator
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Help others calculate simple interest on loans and investments with our free calculator tool.
How Simple Interest Calculator Works
Enter Your Numbers
Put in principal, rate, and time
Calculate Interest
Get instant simple interest results
Common Simple Interest Examples
Personal Loans
Short-term loans
Car loans, education loans
Savings Accounts
Fixed deposits
Bank savings, certificates
Investments
Simple returns
Bonds, treasury bills
Business Loans
Working capital
Short-term financing
What is a Simple Interest Calculator?
A simple interest calculator is a tool that helps you find out how much interest you will earn or pay. It uses a simple formula to calculate interest on the original amount only.
Unlike compound interest, simple interest does not add interest to interest. It only calculates interest on the principal amount you start with.
Easy to Use
Just enter principal amount, interest rate, and time period to get instant results.
Quick Calculations
Get instant simple interest calculations for loans, savings, and investments.
Multiple Uses
Perfect for personal loans, car loans, savings accounts, and business financing.
How Simple Interest Calculator Works
Enter the principal amount (the money you borrow or invest)
Enter the interest rate (percentage per year)
Enter the time period (how many years)
The calculator shows you the interest amount and total amount
Simple Interest Calculator Examples
| Principal Amount | Interest Rate | Time Period | Simple Interest | Total Amount |
|---|---|---|---|---|
| $1,000 | 5% | 2 years | $100 | $1,100 |
| $5,000 | 3% | 5 years | $750 | $5,750 |
| $200 | 10% | 1 year | $20 | $220 |
| $10,000 | 4% | 3 years | $1,200 | $11,200 |
| $2,500 | 6% | 4 years | $600 | $3,100 |
Simple Interest vs Compound Interest
Simple Interest Calculator
Interest is calculated only on the original principal amount.
Formula:
SI = (P × R × T) ÷ 100
Example: $1000 at 5% for 2 years
Interest = $100
Compound Interest
Interest is calculated on principal plus previously earned interest.
Formula:
CI = P(1+R/100)^T - P
Example: $1000 at 5% for 2 years
Interest = $102.50
When to Use Simple Interest Calculator
Use simple interest for short-term loans, car loans, personal loans, and some savings accounts. Simple interest is easier to calculate and understand than compound interest.
Frequently Asked Questions About Simple Interest Calculator
How do I use a simple interest calculator?
Using a simple interest calculator is very easy. Enter the principal amount (money you borrow or invest), the interest rate per year, and the time period in years. The calculator will instantly show you the interest amount and total amount you will pay or receive.
What is the simple interest formula?
The simple interest formula is: Simple Interest = (Principal × Rate × Time) ÷ 100. For example, if you invest $1000 at 5% interest for 2 years, the simple interest is (1000 × 5 × 2) ÷ 100 = $100.
When is simple interest used instead of compound interest?
Simple interest is used for short-term loans like car loans, personal loans, and some business loans. It's also used in some savings accounts and certificates of deposit. Simple interest is easier to understand and calculate than compound interest.
What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal amount. Compound interest is calculated on the principal plus any interest already earned. This means compound interest grows faster than simple interest over time.
Can I calculate simple interest for months instead of years?
Yes, you can calculate simple interest for months. Just convert months to years by dividing by 12. For example, 6 months = 0.5 years. So for $1000 at 6% for 6 months: Simple Interest = (1000 × 6 × 0.5) ÷ 100 = $30.
Is simple interest better than compound interest?
It depends on your situation. If you're borrowing money, simple interest is better because you pay less. If you're investing money, compound interest is better because you earn more. Simple interest is mainly used for short-term loans and some savings products.