Simple Interest Calculator
Calculate the total amount of interest to be paid over a period
What is Simple Interest?
Simple Interest (SI) is the interest computed on the initial principal amount for a given time period at a fixed rate of interest. It does not add up to previously earned interest as compound interest does.
Why is Simple Interest Important?
- Easy to Calculate – Suitable for quick financial planning.
- Fixed Returns – Interest remains the same throughout.
- Used in Short-Term Loans – Personal loans, car loans, and fixed deposits.
- Common in Savings & Investments – Some bank accounts and bonds offer SI-based returns.
Applications of Simple Interest
Simple Interest is widely used in various financial scenarios, including:
1. Loans & Borrowings
- Personal Loans – Many short-term personal loans use SI for interest calculation.
- Auto Loans – Some car loans follow SI principles for EMI structuring.
- Education Loans – Some schemes of student loans charge interest based on SI prior to beginning the repayment period.
2. Investments & Savings
- Fixed Deposits (FDs) – There are some bank FDs that make use of SI while interest is periodically withdrawn.
- Government Bonds – Some bonds provide SI-based returns.
- Recurring Deposits (RDs) – SI can be utilized in computing periodic returns from fixed savings.
3. Short-Term Credit
- Trade Credit – SI is used by companies while calculating interest on delayed payments.
- Salary Advances – Employers can take SI on salary advances or employee loans.
Simple Interest vs Compound Interest
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Interest Calculation | Only on the principal amount | On principal + accumulated interest |
| Growth | Linear | Exponential |
| Best For | Short-term loans & investments | Long-term wealth building |
| Complexity | Easy to calculate | More complex due to compounding |
How To Calculate Simple Interest?
Simple Interest formula is
SI= P×R×T/100
Here,
SI = Simple Interest
P = Principal Amount (Initial Investment/Loan)
R = Annual Interest Rate (%)
T = Time Period (in years)
Total Amount (A) after interest is
A=P+SI
For instance, if you invest ₹10,000 at 8% interest per annum for 3 years, the interest earned will be:
SI= 10,000×8×3/100 = ₹2,400
So, the total amount after 3 years = ₹10,000 + ₹2,400 = ₹12,400.
What is a Simple Interest Calculator?
A Simple Interest Calculator helps you determine the total interest earned or payable on an investment or loan using the SI formula. It simplifies financial decisions and ensures accuracy.
Who Can Use the Simple Interest Calculator?
- Students- For learning the basic concepts about money.
- Investors- To compute income on time deposits.
- Borrowers- To see how much one pays interest for a loan.
- Businessmen- To determine how much short-term credits will cost them.
How to Use the Equirus Wealth Simple Interest Calculator?
- Principal Amount (P)- Amount of loan or investment.
- Select Interest Rate (R)- Yearly rate of interest.
- Select Time Period (T)- In years.
- Click 'Calculate' – See the interest earned/payable and total amount right away.
Advantages of Using a Simple Interest Calculator
- Quick & Accurate – No need for manual calculations.
- Better Financial Planning – Compares loans and investments.
- User-Friendly – Good for beginners and experts alike.
