The technique which is used to calculate the proportion of interest paid on a specific sum over a set period of time at a set rate is termed as simple interest. Here, the principal amount remains the same as it is one of the most easiest and straightforward technique for calculating interest in money. Under simple interest formula the interest is always applied to the initial principal amount including every cycle. For example, money deposited in banks are paid interest which differ, and one amongst the few is simple interest.
Simple interest is easy to understand and follow as it has a formula which shows exactly what simple interest is.
The calculation goes like this – principal x rate x time ÷ 100. The rate of interest is always in terms of a percentage, so it is taken to be r/100. Though one can use this formula to get the exact amount that one would yield via simple interest, there are many tools which make the task of calculating simple interest easier. The simple interest calculator helps you to calculate the interest on a principal amount without considering compounding. So, if you have taken a loan, you can evaluate the payable fee at a simple interest rate. You can also evaluate the interest you are earning from deposits or investments.
There is an availability of numerous simple interest calculators online but one which is the most effective is the ET Money Simple Interest Calculator, which has a simple interest formula built into its program, and all one needs to do is input the figures to calculate the total simple interest on your loans, deposits or investments. You can use the simple interest calculator which gives you a clear figure about your borrowings, investments and helps you understand where you stand at the end of the loan or investment term.
A simple interest calculator uses the formula in its algorithm. You input all the variables you need for a certain loan or investment and the calculator gives you the total interest you’ll receive or pay based on the data you enter, which makes the entire calculation exercise easier minus any mathematical errors.