What is Simple Interest?
Simple Interest (SI) is the most basic form of interest calculation. Unlike compound interest, simple interest is calculated only on the original principal amount, not on accumulated interest.
Simple interest is commonly used for short-term loans, car loans (some), and basic savings calculations. It's the first type of interest students learn in school and remains useful for quick mental calculations.
Formula
Simple Interest = P × R × T / 100
Where: - P = Principal amount - R = Annual rate of interest (%) - T = Time period in years
Total Amount = Principal + Simple Interest
For ₹1,00,000 at 8% for 5 years: - SI = 1,00,000 × 8 × 5 / 100 = ₹40,000 - Total Amount = ₹1,40,000 - Compound Interest would be ₹46,933 (₹6,933 more)
How to use this Simple Interest Calculator?
1. Enter the principal amount. 2. Set the annual interest rate. 3. Enter the time period in years. 4. See the simple interest, total amount, and comparison with compound interest.