Simple Interest Calculator
Simple Interest
| Payment/month | XXXX |
| Payment/year | XXXX |
| Loan Amount | ||
| Interest Rate: | % per year |
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What is Simple Interest?
Simple interest is the interest amount calculated based on the initial principal amount and a constant interest rate, without any changes in the rate over time.
It is the most common method for calculating the interest on a loan or an investment over time.
The formula for calculating simple interest is:
Simple Interest (SI) = (Principal × Rate × Time) / 100
Where, SI is the simple interest, Principal is the initial amount, Rate is the annual interest rate and Time is the time period of loan in years.
Terms used in Simple Interest Calculator
Principal (P): This is the initial amount of money that is either borrowed as a loan or invested. It’s the starting point for the calculation.
Interest Rate (R): This is the annual percentage rate (APR) or the rate at which interest is charged or earned. It’s usually expressed as a percentage.
Time (T): This is the period for which the money is borrowed or invested, typically measured in years.
For example, if you borrow ₹1,000 at an annual interest rate of 5% for 2 years, the simple interest would be:
SI = (1000 × 5 × 2) / 100 = ₹100
So, you would pay ₹100 in interest over the 2-year period, in addition to repaying the ₹1,000 principal amount.
