Simple Interest Calculator
A simple interest calculator helps you easily determine the interest on a loan or investment. By entering the principal amount, interest rate, and time period, it quickly calculates the total interest earned or payable.
Principal Amount
₹
Interest rate
%
Time Period
years
Principal amount
₹ 1,00,000
Interest
₹ 32,500
Total value
₹ 1,32,500
What Is a Simple Interest Calculator?
A simple interest calculator is an online handy tool for calculating interest on loans or investments. It uses a simple formula to help you find out how much interest you will earn or pay over a set period with a fixed interest rate.
Using the calculator is straightforward: just enter the principal amount, interest rate, and time duration, and it quickly gives you the total interest. This tool is great for managing personal finances, small loans, and simple investments, allowing you to skip complicated calculations.
Whether you are looking to understand the costs of borrowing or see how much you can earn on your investment, the simple interest calculator provides quick and clear results, helping you easily make smart financial choices.
What Is the Simple Interest Formula?
The simple interest formula is a simple method used to calculate interest on loans or investments. It depends on the principal amount, the interest rate, and the time period.
Formula: SI = (P × R × T) / 100
Where
- SI: Simple Interest
- P: Principal (the initial amount borrowed or invested)
- R: Interest Rate (per annum, as a percentage)
- T: Time period (in years)
Maturity Amount Formula:
The maturity amount is the total amount you receive or owe after adding the simple interest to the principal.
Formula: A = P + SI
Where:
- A: Maturity Amount (Principal + Interest)
- P: Principal
- R: Interest Rate
- T: Time period
How to Calculate Simple Interest Using the Calculator
To calculate Simple Interest using a Simple Interest calculator, follow these easy steps:
- Enter the initial amount you are borrowing or investing.
- Enter the annual interest rate. It should be in a percentage form.
- Specify the duration for which the loan or investment will be held, typically in years.
- After entering these values, the calculator automatically applies the formula:
SI = (P × R × T) / 100
This gives you the total simple interest for the given period. - The calculator will also show the maturity amount, the sum of the principal and the interest.
Example:
Let’s say you invest ₹50,000 at an annual interest rate of 8% for 3 years.
Here’s how you can calculate the simple interest and maturity amount:
- Principal (P): ₹50,000
- Interest Rate (R): 8% per annum
- Time Period (T): 3 years
Step-by-Step Calculation:
-
Simple Interest (SI) = (50,000 × 8 × 3) / 100
= ₹12,000 -
Maturity Amount (A) = P + SI
= ₹50,000 + ₹12,000
= ₹62,000
So, after 3 years, the total amount (including principal and interest) will be ₹62,000, with ₹12,000 as interest.
How to Use Kotak Securities' Simple Interest Calculator
Using the Kotak Securities Simple Interest Calculator is easy. Follow these steps:
- Input the Principal: Enter the amount you are borrowing or investing (e.g. ₹50,000).
- Enter the Interest Rate: Input the annual interest rate (e.g. 6%).
- Specify the Time: Enter the loan or investment duration (e.g. 3 years).
Once you enter these details, the calculator will instantly show the simple interest and total amount payable or receivable.
Example:
For ₹50,000 at 6% for 3 years:
Simple Interest = (₹50,000 × 6 × 3) / 100 = ₹9,000
Total Amount = ₹50,000 + ₹9,000 = ₹59,000
Frequently Asked Questions
What is simple interest?
Simple interest is a method to calculate the cost of borrowing or earning money, based only on the initial principal amount. It does not factor in previously earned or paid interest, making it easy to compute.
What is a simple interest calculator?
A simple interest calculator is an online tool that calculates interest on loans or investments. Entering the principal, interest rate, and time instantly shows the interest amount and total sum.
What is a simple interest formula?
The formula is:
SI = (P × R × T) / 100
Where P is the principal, R is the annual interest rate, and T is the time in years.
Why is simple interest calculated?
Simple interest is calculated to determine the extra amount payable on loans or receivable from investments over a set period.
How does the simple interest calculator work?
The calculator uses the simple interest formula. Once you enter the principal, rate, and time, it instantly calculates the interest and total maturity amount.
How to calculate simple interest in a calculator?
To calculate simple interest using a calculator, input the following:
- Principal (P): The amount you borrowed or invested.
- Rate of Interest (R): The percentage rate applied per year.
- Time (T): The period for which you’re borrowing or investing.
The calculator will then automatically compute the simple interest and the total amount.
What are the advantages of using the simple interest calculator?
- It saves time by instantly calculating interest, eliminating manual effort.
- It reduces calculation errors.
- It allows easy comparison of different loans or investments to find the best option.
- Its simple interface requires no complex formulas.
When do you use the simple interest formula?
The formula is used for short-term loans or fixed investments where interest isn’t compounded, making it ideal for determining exact interest amounts over a specific period.
Are there any online simple interest calculators available?
Yes, many free online simple interest calculators are available on bank websites, financial platforms, and investment apps, including Kotak Securities.
How to calculate EMI on a simple interest calculator?
Simple interest calculators are typically not designed for calculating EMI, which is based on compound interest; use a dedicated EMI calculator instead.
How do I calculate simple interest on a loan or investment?
Use the formula SI = (P × R × T) / 100, or input the principal, interest rate, and time period into a simple interest calculator for an instant result.
Is simple interest always the best option for calculating interest?
While simple interest is suitable for short-term loans or straightforward investments, compound interest may provide a more accurate assessment for long-term loans or investments.
How do I calculate my total interest earned using a simple interest calculator?
Enter the principal, interest rate, and time into the calculator, and it will automatically compute the total interest earned or payable.
Are there any other factors I should consider when using a simple interest calculator?
Yes, consider factors like loan tenure, interest rate type (fixed or floating), and whether compound interest would give a better long-term view, as simple interest does not account for changes in rates or interest on interest.
