Simple Interest Calculator
Calculate returns on investments and loans using simple interest. Perfect for short-term investments, personal loans, and basic financial planning.
Calculate Simple Interest
Enter your investment or loan details to calculate simple interest returns
Investment Summary
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Simple Interest vs Compound Interest
Simple Interest
- Interest calculated only on principal amount
- Linear growth over time
- Easy to calculate and understand
- Common for short-term loans
- Formula: SI = P × R × T
Compound Interest
- Interest calculated on principal + accumulated interest
- Exponential growth over time
- More complex calculation
- Common for long-term investments
- Formula: A = P(1 + r/n)^(nt)
Quick Comparison: ₹1,00,000 at 8% for 10 years
Where is Simple Interest Used?
Personal Loans
Short-term personal loans often use simple interest for easy calculation and transparency.
Auto Loans
Car loans typically use simple interest with fixed monthly payments.
Short-term Deposits
Fixed deposits with tenure less than 1 year often use simple interest.
Informal Lending
Friends and family loans commonly use simple interest for simplicity.
Frequently Asked Questions
What is simple interest?
Simple interest is a quick method of calculating the interest charge on a loan or investment. It's calculated only on the principal amount and doesn't take into account any accumulated interest from previous periods.
How is simple interest calculated?
Simple interest is calculated using the formula: SI = P × R × T, where P is the principal amount, R is the annual interest rate (in decimal), and T is the time period in years.
When should I use simple interest?
Simple interest is best for short-term loans and investments (usually less than 1 year). It's simpler to calculate and understand, making it ideal for personal loans, auto loans, and short-term deposits.
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest. Compound interest yields higher returns over long periods.
Can I convert between time units?
Yes! For simple interest calculations: 1 year = 12 months = 365 days. Our calculator automatically handles these conversions for accurate results.