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Simple interest calculator
Interest charged or earned on the original amount only. Useful for informal loans, some gold loans and quick checks.
The formula
SI = P × R × T ÷ 100
P is the principal, R the yearly rate in percent and T the time in years. ₹1,00,000 at 8% for five years earns ₹40,000. Compounded yearly, the same money would earn about ₹46,933, so the chart shows both.
Questions
How do I work out simple interest for months?
Enter the time as a fraction of a year: six months is 0.5 and three months is 0.25.
Where is simple interest still used?
Mostly in short loans between people and in some gold and agricultural loans. Bank deposits and most loans use compound interest or reducing balances.