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About the Simple Interest Calculator
Simple interest is charged only on the original principal, never on accumulated interest. It appears in short-term lending, some vehicle finance and most informal borrowing, and it is what "flat rate" loans are built on.
As a borrower, simple interest on a loan you are repaying in instalments is bad news — you keep paying interest on money you have already returned. As an investor, it is simply a lower return than compounding.
The formula
The total amount repayable is P + SI.
Things worth knowing
Frequently asked questions
SI = (P × R × N) ÷ 100, where P is the principal, R the annual rate and N the number of years. The amount repayable is the principal plus this interest.
Short-term personal lending, some vehicle and consumer durable loans quoted on a flat basis, and most informal borrowing. Bank deposits and mainstream loans use compounding or reducing balance instead.
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