Calculate simple interest on loans and investments. Enter principal, rate, and time to get instant results.
Simple interest is the most straightforward way to calculate interest on a loan or deposit. Unlike compound interest, it's calculated only on the original principal amount the interest does not earn interest. This makes it easier to predict and typically cheaper for borrowers on short-term obligations.
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Simple interest is still the standard for many financial products: auto loans, short-term personal loans, Treasury bills, and some bonds. It's preferred when the lending period is short (under 1-2 years) because the difference from compound interest is negligible, and the calculation is transparent.
Short-term borrowers
Understand exact interest costs on personal or auto loans.
Students
Master the foundation of interest calculations before learning compound interest.
Small business owners
Calculate interest on trade credit or short-term working capital loans.
Teachers
Use as a teaching tool for basic financial mathematics.
Simple interest is calculated only on the original principal amount. The formula is SI = P × R × T / 100, where P is principal, R is annual rate, and T is time in years.
Simple interest is calculated only on the principal, while compound interest is calculated on principal plus accumulated interest.
Simple interest is commonly used for short-term loans, car loans, and some personal loans.