Simple Interest vs Compound Interest Calculator
Welcome to our Simple Interest vs Compound Interest Calculator, designed to give you instant results with just a few clicks. Whether you want to calculate simple interest on a loan or check how your compound interest investment grows over time, this tool is for you.
Simple Interest Calculator
Compound Interest Calculator
How to Calculate Simple Interest
If you're wondering, "how to calculate simple interest?", the process is straightforward. Simple interest is calculated only on the initial amount of money (the principal). It doesn't include interest on the interest already earned. Our tool acts as an effective simple interest loan calculator by applying the standard formula:
Simple Interest Formula: `Interest = P × R × T / 100`, where P is the Principal, R is the Rate of interest per year, and T is the Time in years.
For example, for a loan of $1,000 at 5% for 3 years, the interest would be `$1000 * 5 * 3 / 100 = $150`.
FAQs
Q1. What’s the difference between simple interest and compound interest?
A: Simple interest is calculated only on the original principal amount. Compound interest is calculated on the principal amount plus the accumulated interest. As a result, compound interest makes your money grow much faster over time. Our simple interest vs compound interest calculator can clearly show you this difference with its graphs.
Q2. Can I use this as a simple interest loan calculator?
A: Yes! The "Simple Interest" mode is perfect for this. Just enter the loan amount as the principal, the loan term as the period, and the interest rate to see the total interest you will pay.
Q3. Is this better than simple interest calculation in Excel?
A: While you can perform a simple interest calculation in Excel, our tool offers several advantages: it's faster, provides an interactive graph to visualize growth, shows the formula, and requires no setup. It's a great alternative for quick calculations.