Simple Interest Calculator
Interest on the principal alone, never compounded.
Principal, rate and period. The formula is P × R × T ÷ 100, and the working is shown.
Where simple interest is actually used
Short-term lending, some vehicle loans, and statutory interest such as the 18% on delayed GST or 1% a month under sections 234B and 234C. Most bank products compound instead.
The difference grows with time
Over one year the gap between simple and compound interest is small. Over ten it is substantial. Anyone quoting a "rate" over a long period should be asked which one they mean.
Frequently asked questions
How do I convert months to years?
Divide by twelve. This calculator does it for you if you choose months or days.
Which is better for a borrower?
Simple interest, at the same nominal rate, because the interest never earns interest.