Simple interest
Flat interest with no compounding
Worked example
Using the default values, simple interest gives a total amount of ₹1,30,000.
| Item | Value |
|---|---|
| Time | 3 years |
| Monthly interest | ₹833 |
| Total payable | ₹1,30,000 |
What you need
- Principal
- Rate
- Time
Questions
When is interest simple rather than compound?
Most informal and hand loans, some vehicle loans, and short-term advances. Bank deposits and formal loans almost always compound, which costs more over time.
How do I convert a monthly rate to yearly?
Multiply by twelve for simple interest. A moneylender quoting 2% a month is charging 24% a year, not 2%.