|% per year|
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Interest is defined as the fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is the price paid for the use of borrowed money or the money owed by the deposited funds.
Principal is the amount that is taken initially or invested initially.
Simple interest is calculated only based on the principal amount or the portion of the simple interest that remains unpaid.
The sum of principal and simple interest is the total amount you need to pay.
New to compound interest? Check it out at our Compound Interest Calculator?
Note: Simple interest is always paid in the principal invested and the accrued interest is not added to the principle.
For example, if we have Rs. 1000 invested at 10% simple interest per annum for 5 years, you will receive Rs 100 as interest each year for the 5 years of investment.
|Year||Principle||Interest||Amount at the end|
So at the end of the 5th year, the amount we get is 1,500.
Simple interest usually applies to short-term personal loans where the time period is very short. Note that most mortgages do not use simple interest. Planning for a loan and want to estimate a rough EMI that you many have to pay? Use our EMI calculator.
Some banks use simple interest method for mortgages for bi-weekly payment plans. Bi-weekly plans generally help consumers pay off their loans early because the borrowers make two extra payments a year. This will save interest over the tenure of the loan by clearing off the principal faster.
Some limitations of simple interest:
Targeting to increase your salary and clear off your loan faster? See how you can increase your salary at our Salary Calculator page
Using Calculator Hut’s simple interest calculator, your simple interest calculations become easier. Enter the loan amount and the yearly interest and click on calculate. You will get how much you need to pay for one-month as well as one year.
If you loved our Simple Interest calculator and want to use it as a widget on your website, we would assure you a FREE customised set up as per your suggestions. Reach us at [email protected] and let us know your preferences.
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