Simple Interest Calculator
Calculate simple interest on loans, savings, and investments using the formula SI = P × R × T / 100. Find interest amount, principal, rate, or time period.
Simple Interest Calculator
Calculate simple interest using the formula: SI = P × R × T / 100
Calculate interest earned from principal, rate, and time
Simple Interest is calculated only on the original principal amount. Unlike compound interest, it doesn't earn interest on previously accumulated interest.
Formula: SI = (P × R × T) / 100, where P = Principal, R = Annual Rate (%), and T = Time in years.
Common uses: Short-term loans, car loans, some savings accounts, and educational loans often use simple interest calculations.
Understanding Simple Interest
Simple interest is a method of calculating the interest charge on a loan or investment based only on the original principal amount. Unlike compound interest, simple interest does not take into account any accumulated interest from previous periods.
The Simple Interest Formula
SI = (P × R × T) / 100
SI = Simple Interest (interest earned/paid)
P = Principal (initial amount)
R = Rate (annual interest rate in %)
T = Time (period in years)
Related Formulas
Find Principal:
P = (SI × 100) / (R × T)
Find Rate:
R = (SI × 100) / (P × T)
Find Time:
T = (SI × 100) / (P × R)
Example Calculation
Problem: If you invest $10,000 at 5% annual interest for 3 years, how much interest will you earn?
SI = (P × R × T) / 100
SI = (10,000 × 5 × 3) / 100
SI = 150,000 / 100
SI = $1,500
Total amount after 3 years: $10,000 + $1,500 = $11,500
Simple Interest vs Compound Interest
| Aspect | Simple Interest | Compound Interest |
|---|---|---|
| Calculation Base | Original principal only | Principal + accumulated interest |
| Interest Growth | Linear (constant) | Exponential (increasing) |
| Total Interest | Lower over long periods | Higher over long periods |
| Common Uses | Car loans, short-term loans | Savings accounts, mortgages |
| Best For | Borrowers (lower cost) | Savers (higher returns) |
Common Applications
Auto Loans
Many car loans use simple interest, making payments more predictable.
Personal Loans
Short-term personal loans often calculate interest using simple interest.
Certificates of Deposit
Some CDs pay simple interest, especially shorter-term ones.
Student Loans
Federal student loans use simple interest on the principal balance.
Treasury Bonds
Government bonds often use simple interest calculations.
Short-term Investments
Money market accounts and short-term deposits may use simple interest.