What is simple interest?
When you borrow money from the lender, you have to pay an extra sum of money to the lender. This extra sum of money that you have to pay to the lender is known as simple interest. This type of interest, unlike compound interest, is calculated only on the principal portion of the loan.
Simple Interest Formula
To calculate simple interest towards your personal loan, one can use the below formula.
Simple interest= I= [(P×R×T0)/100]
In the above formula, P= principal
R= Rate of interest
For instance, let’s consider the principal amount as Rs. 70000
For 3 years i.e. the time
The interest rate of 4%
Total amount= Rs. 78400, whereas the interest, you will have to pay is Rs. 8400.