Simple Interest Calculator
Interest on principal without compounding.
Inputs
This calculator is for general information only and isn't financial advice. Rates, tax rules, and your actual eligibility depend on your specific situation — check with your bank or a qualified advisor before acting on it.
Formula
I = P × R × T / 100; Total = P + I
P is the principal, R is the annual interest rate in percent, and T is time in years. Interest is calculated only on the original principal each year — it is never added back into the base for the next period's calculation.
Worked example
₹1,00,000 at 7% simple interest for 5 years earns ₹35,000 in interest (₹7,000 every year, flat), for a total of ₹1,35,000. At 7% compounded monthly over the same period you'd get about ₹1,41,763 — the gap is modest over five years but grows with longer tenures.
Where this can give the wrong answer
- Fractional years are accepted (e.g. 2.5 years) and scale T linearly — some short-term instruments instead use a 365-day day-count convention that this calculator does not model.
- A 0% rate returns the principal with zero interest, which is valid for interest-free loans or placeholder scenarios.
- Simple interest understates growth whenever interest would normally be reinvested — use the compound interest calculator when the product actually compounds.
FAQ
- Many personal loans, pawn loans, and short-term IOU arrangements quote simple interest. Some government small-savings schemes and educational loan moratorium periods also accrue simple interest until compounding begins.