Simple Interest Calculator

Simple interest is charged only on the original principal, never on accumulated interest. Enter the principal, annual rate and period in years to see the interest and the total.

Principal amount

₹

Interest rate (per year)

Time period (years)

Enter months as a decimal: 18 months is 1.5 years.

Interest

₹24,000

Principal

₹1,00,000

Total amount

₹1,24,000

Per year

₹8,000

Principal vs interest

Principal: ₹1,00,000 (80.6%)
Total interest: ₹24,000 (19.4%)

What it is:: A simple interest calculator.
What it calculates:: Interest charged on the principal alone, and the total payable or receivable.

Assumptions

Interest never compounds.
The rate is annual and the period is in years.
Tax on interest income is not applied.

How it works

Because interest never compounds, the amount earned or charged is the same in every period.

Simple interest appears in short-term lending, some gold loan schemes and in the interest that accrues on an education loan during a moratorium. Most bank loans and deposits use compounding instead.

Formula

SI = P x R x T / 100

P: = principal
R: = annual rate of interest in percent
T: = time in years

Example calculation

₹1,00,000 at 8% simple interest for 3 years

Principal: ₹1,00,000
Interest per year: ₹8,000
Total interest: ₹24,000
Total amount: ₹1,24,000

Frequently asked questions

How is simple interest different from compound interest?

Simple interest is calculated on the principal alone. Compound interest is calculated on the principal plus interest already added, so it grows faster over time.

Where is simple interest actually used?

Short-term loans, some gold loan and bullet repayment schemes, and interest accruing during a loan moratorium. Fixed deposits and home loans do not use it.

Can I enter a period in months?

Enter it in years as a decimal: 18 months is 1.5 years, 6 months is 0.5.