Simple Interest Calculator
Simple interest is a type of interest in a banking system that the borrower pays to the lender on the principal amount. It remained fixed throughout the term of the loan and was calculated on the original principal amount. Simple interest remains constant throughout the loan term or investment. A simple interest calculator is an essential tool for calculating the simple interest amount that the borrower will pay on the principal amount.
You can calculate the simple interest, final amount, time, or principal amount by using our simple interest calculator. It is based on simple mathematical formula in this article so don’t skip till the end.
Mathematical Formulas of The Calculator
This calculator for calculating simple interest is based on the following mathematical formulas that provide you with simple interest (SI), initial sum principal amount (P), final amount, interest rate (r), and loan term (T) based on the suitable inputs you provide.
Simple interest Formula:
It calculates simple interest using principal amount, interest rate, and loan term by dividing it by percentage.
Simple Interest (SI) = P x R x T / 100
- SI = Simple Interest
- P = Principal amount (the initial sum of money)
- R = Rate of interest (annual interest rate in %)
- T = Time (in years)
Principle Amount (P):
P = 100 x SI / R x T
Interest Rate (R):
R = 100 x SI / P x T
Loan Term (T):
R = 100 x SI / P x R
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How to Calculate SI amount
Suppose you acquire a loan of $2930 from your bank to purchase a car. The bank charges a 5 percent interest rate for a loan term of 5 years. Your principal amount is $2930, the interest rate would be 5% and the loan term would be 5 years. Let’s calculate the simple interest amount using a simple interest calculator by filling in the appropriate input fields:
By putting values in the formula:
Simple Interest = P x R x T / 100
SI =2930 x 5 x 5 / 100
SI = 73250 / 100
Simple Interest amount = $732.50
