BYAJ GUIDE

How is simple interest calculated?

Learn the simple interest formula and how principal, rate, and time determine the estimate.

Simple interest is calculated on the original principal for the full duration. It does not add previously accrued interest to the amount used in later interest calculations. Use the formula: interest = principal × rate × time ÷ 100.

In the formula, principal is the starting amount, rate is the percentage for the selected time period, and time is measured in matching periods. For example, at 2% per month for 3 months on ₹50,000, estimated interest is ₹50,000 × 2 × 3 ÷ 100 = ₹3,000. The estimated total is ₹53,000 if the principal stays unchanged.

This calculator accepts years, months, and days. It converts one month to 30 days and one year to 365 days, then applies the matching monthly or annual rate. Actual lender calculations may use different day-count conventions or include payments and fees.

This guide explains a general estimate. A lender’s contract and repayment schedule determine the actual amount due.