Simple Interest Calculator

Our simple interest calculator puts precision at your fingertips. Just fill-in the corresponding fields with appropriate numbers and effortlessly acquire the simple interest value.

%
%
  • Per Year
  • Per Month
  • Year
  • Month
%
  • Per Year
  • Per Month
  • Year
  • Month
illustration

Lorem ipsum dolor sit amet consectetur adipisicing elit.

Result

Payment Breakdown

Principal:

Interest:

Balance Accumulation Graph

Principal

Interest

Schedule

Definition of Simple Interest and Its Formula

Simple interest (SI), as the name indicates, is the most straightforward way of computing interest on an investment or loan. This type of interest is calculated on the actual principal amount. Therefore, SI is entirely different from compound interest that finds interest on the new amount gained by adding interest to the principal sum.

If you want to determine the amount of SI you’ll receive or owe, the following formula will be useful:

Simple Interest (SI) P × R × T 100

where ‘P’ is the ‘principal amount,’ ‘R’ refers to the ‘per annum percentage of interest’ and ‘T’ stands for the ‘time duration for which someone receives the principal amount.’

Sometimes, experts just use the ‘P x R x T’ variation to calculate the simple interest. In such a situation, ‘R’ is considered as the ‘decimal form of interest rate per time period.’ This means that an interest rate of ‘7%’ will be considered ‘0.07’ in its decimal form here. 

On the other hand, consider a scenario where a person borrows money from a bank. Since the borrower has to return the exact borrowed plus the interest amount, the formula for calculating simple interest for such a situation will be as follows:

A = P (1+ RT),

where ‘A’ refers to ‘sum of amount after the specified time period,’ ‘P’ is the ‘principal amount,’ ‘R’ stands for the ‘decimal form of interest rate per time period’ and ‘T’ represents the ‘period the money is borrowed or invested for.’

Simple Interest Calculation Using Real World Examples

To further grasp the concept of simple interest and its computations, let’s apply any of the aforementioned formulae to two real-world examples.

list-bullet

Examples 1

Monica took out a three-year loan of $50,000 at a per-annum rate of 3.5%. What would be the total interest accumulated after three years?

list-bullet

Solution

Principal amount (P) = $50000

R = 3.5%

Time period (T) = 3 years

By implementing the first formula of simple interest, the equation will become,

Simple Interest (SI) = 50000 × 3.5 × 3 100

Simple Interest (SI) = $5250

Hence, the total accumulated simple interest after three years would be 5250 dollars.

list-bullet

Examples 2

Ross obtains a one-year loan from a bank for 10,000 dollars at an annual interest rate of 10%. Calculate the total amount due, including the interest, at the end of the year.

list-bullet

Solution

Principal amount (P) = $10000

R = 10%

Time period (T) = 1 (one) year

By applying the formula of simple interest, the equation will become

Simple Interest (SI) = 10000 × 10 × 1 100

Simple Interest (SI) = $1000

Now, the total sum (A) that Ross must pay to the bank after the stipulated time frame will be calculated as,

Total amount (A) = Principal amount (P) + Interest (SI)

Total amount (A) = 10000 + 1000

Total amount (A) = 11000

Are There Any Different Types of Simple Interest?

There are two types of simple interests: Exact and Ordinary. The formula for the calculation of both these types remains the same. However, these two types differ in the usage of time. For instance,

Exact Simple Interest

Exact Simple Interest

This sort of simple interest is appropriate for calculating SI over a leap year (366 days). It is mostly applicable in banking and financial computations.

>Ordinary Simple Interest

Ordinary Simple Interest

In the context of ordinary simple interest calculations, a year is equivalent to 365 days. Simple interest of this type is also used in banking, finance, and auto loans.

Step-by-Step Guide for Using Our Simple Interest Calculator

Our interest calculator streamlines the process of finding simple interest and making further decisions. Here is a step-by-step detail of how to benefit from the functionality of this online tool:

Bullet

Enter the principal amount in the box provided to get started.

Bullet

Specify the percentage of interest rate you wish to use.

Bullet

Select the appropriate time period unit and input the duration.

Bullet

Within seconds, you will get the simplified form of your entered fractions.

Bullet

Hit the ‘Calculate’ button to see the instant results of our simple interest calculator.

Note: If you wish to make another calculation, press the ‘Clear’ option to erase the data of the current computation.

Key Features of Our Simple Interest Calculator

Our simple interest calculator not only simplifies the computation of simple interest, but it also has numerous additional useful features. Some of these are listed below:

arrow

Easy-to-Use

Precise Computations

Instantaneous Results

Multi-Platform Compatibility

Being an expert in finance is no longer necessary thanks to our tool. Its user-friendly design makes it easy for users to enter values and compute simple interest for a range of circumstances.

Our simple interest loan calculator uses state-of-the-art technology to function. Therefore, this online tool guarantees accurate financial planning by carrying out precise calculations each time.

Calculating simple interest can be a tedious task, especially if you don’t like working with numbers. But don’t worry because our tool’s accurate algorithm-based functionality enables immediate simple interest computation and quick decision-making.

Our simple interest calculator makes financial calculations convenient. The tool is accessible as a web application. Therefore, people can use the features of this online utility from any device.

Frequently Asked Questions

Lorem ipsum dolor sit amet consectetur adipiscing elit sed do eiusmod sed do eiusmod tempor  incididunt.

No! These two interest categories are not the same. Compound interest refers to the concept of having interest on interest, whereas simple interest is applicable to the initial principal amount only.

Not at all! Using our simple interest calculator is completely safe, as we operate on the HTTPS and other advanced encryption techniques.

Absolutely! Our tool determines the interest that the borrower must pay on loans and the interest that the investor must receive on investments. Therefore, you can use this simple interest calculator for loans and investments.

No! Both interest rates and principal amounts remain the same over time.

Not at all! Whenever simple interest is calculated, it is always a positive figure because it represents extra money earned or paid on a loan or investment

The easiest and quickest way to calculate the simple interest is to use a reliable software application, like this one.

If you’re a borrower, paying simple interest will benefit you because it lowers your total payment over time. On the other hand, if you obtain compound interest on your loan, investment, or regular savings account, you will ultimately earn bigger returns.