Simple Interest (SI) Calculator
Calculate simple interest and total accumulated value across custom tenures (years, months, or days) with interactive charts.
Loan / Deposit Parameters
Interest & Maturity Results
How Simple Interest Works in Finance & Lending
Simple Interest (SI) is a quick and straightforward method of calculating interest charged on a loan or earned on an investment. Unlike compound interest, simple interest is determined exclusively on the initial principal amount and does not compound over time.
Mathematical PTR Formula
- P: Principal sum borrowed or deposited
- R: Annual rate of interest in percentage (%)
- T: Time duration in years
- Total Maturity Amount: A = P + SI
Simple vs Compound Interest
While compound interest generates interest on top of past interest, simple interest stays constant each cycle. It is standardly used for short-term personal loans, car financing, and promissory note agreements.
Frequently Asked Questions (FAQs)
How is Time calculated for Months or Days?
For months, convert to years by dividing by 12 (e.g., 6 months = 6/12 = 0.5 years). For days, divide by 365 (e.g., 73 days = 73/365 = 0.2 years).
Do Indian banks use Simple or Compound interest?
Savings accounts calculate interest daily using simple interest and credit it quarterly. Fixed deposits and recurring deposits use quarterly compounding interest.
How does interest rate affect total repayment?
Because simple interest scales linearly, doubling either the interest rate or the loan duration will exactly double the total interest paid over the lifecycle of the loan.