Simple Interest Calculator
Calculate simple interest, the total repayable amount and a clear year-by-year breakdown using the classic SI = P × R × T / 100 formula. Ideal for loans, deposits and quick interest estimates.
Calculate Simple Interest
Enter the principal amount, annual interest rate and duration to see the interest and total amount instantly.
What Is Simple Interest?
Simple interest is the most straightforward way to calculate the cost of borrowing money or the return on a deposit. It is charged only on the original principal amount, and the interest figure remains constant for every period of the loan or investment. Because the interest never gets added back to the principal, your money grows in a perfectly straight line — making simple interest easy to understand, easy to predict, and common in short-term lending.
The Simple Interest Formula
Simple interest is calculated with this well-known formula:
SI = (P × R × T) / 100
- P = principal (the original amount)
- R = annual rate of interest in percent
- T = time period in years
The total amount you will repay or receive is simply A = P + SI. For instance, a loan of ₹1,00,000 at 10% for 5 years generates ₹50,000 in simple interest, so you repay ₹1,50,000 in total. The interest per year stays fixed at ₹10,000 throughout.
Worked Example
Imagine you deposit ₹75,000 in a scheme that pays 7% simple interest per year for 4 years. Using the formula, SI = (75,000 × 7 × 4) / 100 = ₹21,000. Your maturity amount is ₹75,000 + ₹21,000 = ₹96,000. Notice that you earn exactly ₹5,250 each year — the interest never changes because it is always calculated on the original ₹75,000.
Simple Interest vs Compound Interest
The key difference is what the interest is calculated on. Simple interest uses only the principal, while compound interest uses the principal plus all previously earned interest. Consider ₹1,00,000 at 10% for 10 years: with simple interest you earn ₹1,00,000 (total ₹2,00,000), but with annual compound interest you earn about ₹1,59,374 (total ₹2,59,374). The longer the duration, the bigger the gap — which is why savers prefer compounding and short-term borrowers often benefit from simple interest.
Where Simple Interest Is Used
- Car and vehicle loans: Many auto loans are quoted on a simple-interest basis.
- Personal and short-term loans: Easy-to-understand interest for borrowers.
- Certain fixed deposits: Some deposits pay simple interest, especially non-cumulative options.
- Consumer financing: Instalment plans on appliances and electronics.
- Education and exams: A core concept in school and competitive-exam mathematics.
Tips for Using This Calculator
To model a period in months, convert it to years before entering — for example, 18 months becomes 1.5 years and 6 months becomes 0.5. Always confirm whether your lender or bank uses simple or compound interest, as this dramatically affects the total cost over longer periods. When comparing investment options, remember that headline rates mean little until you know the compounding method and the post-tax return.
Note: Results are estimates for educational purposes. Actual loan and deposit terms may include fees, taxes, or different interest conventions. Always confirm exact figures with your bank or lender before making financial decisions.
Frequently Asked Questions — Simple Interest Calculator
Simple interest is interest calculated only on the original principal amount for the entire duration of a loan or deposit. It does not take into account any interest that has already been earned, so the interest amount stays the same every period. This makes it easy to predict and is commonly used for short-term loans, car loans and some fixed deposits.
The formula is SI = (P × R × T) / 100, where P is the principal, R is the annual rate of interest in percent, and T is the time in years. The total amount you repay or receive is A = P + SI. For example, ₹50,000 at 8% for 3 years earns ₹12,000 in simple interest, giving a total of ₹62,000.
Simple interest is calculated only on the principal, so it grows in a straight line. Compound interest is calculated on the principal plus any interest already earned, so it grows exponentially. Over short periods the two are close, but over many years compound interest produces significantly more — which is why long-term investments favour compounding while short-term loans often use simple interest.
Simple interest is commonly used for car loans, personal loans, short-term business loans, some bank fixed deposits, and instalment-based consumer financing. Many lenders quote simple interest because it is transparent and easy for borrowers to understand, with the same interest amount charged each year on the original loan.
Yes. Convert the time period into years before applying the formula. For months, divide by 12 (so 9 months = 0.75 years); for days, divide by 365. This calculator lets you enter the duration in years, including decimals, so you can model partial-year periods accurately.
In India, interest earned on most deposits is taxable as per your income slab and must be declared as "income from other sources". Banks deduct TDS on fixed-deposit interest above ₹40,000 per year (₹50,000 for senior citizens). Always factor in tax when comparing the real returns of different savings options.