Simple Interest Calculator
Interest on principal, with a compounding comparison
- Principal₹1.00 L81%
- Interest₹24,00019%
| Principal | ₹1.00 L | 80.6% |
| Interest | ₹24,000 | 19.4% |
Year by year
| Year | Simple interest balance | Compounded balance | Difference |
|---|---|---|---|
| 1 | ₹1,08,000 | ₹1,08,000 | ₹0 |
| 2 | ₹1,16,000 | ₹1,16,640 | ₹640 |
| 3 | ₹1,24,000 | ₹1,25,971 | ₹1,971 |
Understand the result
About the Simple Interest Calculator
What is simple interest?
Simple interest is interest calculated only on the original principal, never on interest already earned. It grows in a straight line: ₹1,00,000 at 8% earns ₹8,000 every year, whether it is the first year or the tenth. The formula is SI = P × R × T ÷ 100.
This simple interest calculator works out the interest and total amount for any principal, rate and period in years, months or days, and compares the result with compound interest at the same rate.
How this calculator works
Simple interest is charged only on the original principal. The interest never joins the balance, so every year earns exactly the same amount and the total grows in a straight line.
That is the key difference from compound interest, where each year’s interest is added to the balance and earns interest itself. Over one year the two are identical; over longer periods compounding pulls steadily ahead, and the comparison above shows by how much.
Simple interest is how most informal loans, gold loans, some car loans and non-cumulative deposits are quoted — the interest is paid out or settled rather than left to accumulate.
Formula
SI = P × R × T ÷ 100 Amount = P + SI P = principal R = annual rate (%) T = time in years (months ÷ 12, or days ÷ 365)
Worked example
- ₹1,00,000 at 8% a year for 3 years.
- SI = 1,00,000 × 8 × 3 ÷ 100 = ₹24,000, so the total amount is ₹1,24,000.
- Compounded yearly, the same money would reach ₹1,25,971 — ₹1,971 more.
Simple vs compound interest over time
| Period | Simple interest total | Compounded yearly |
|---|---|---|
| 1 year | ₹1,08,000 | ₹1,08,000 |
| 3 years | ₹1,24,000 | ₹1,25,971 |
| 5 years | ₹1,40,000 | ₹1,46,933 |
| 10 years | ₹1,80,000 | ₹2,15,892 |
For a year or less the two are identical; the gap grows with time. That is why simple interest is used mainly for short periods and informal loans.
Where simple interest is used
- Short-term loans between individuals and some gold loans.
- Interest during an education loan’s moratorium at many banks.
- Flat-rate car, bike and consumer loans, which apply simple interest to the original amount for the whole tenure — making them more expensive than they look.
- Payout deposits such as the Post Office Monthly Income Scheme, where interest is paid out rather than reinvested.
Assumptions & important notes
What this calculator assumes
- Interest accrues evenly through the period and is not added to the principal.
- Periods in days use a 365-day year.
Important notes
- A rate quoted “per month” must be multiplied by 12 before you enter it. 1.5% a month is 18% a year.
- A “flat rate” loan charges simple interest on the original amount for the whole tenure — its true cost is much higher. Use the Flat vs Reducing Rate calculator to see the real rate.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is always calculated on the original principal. Compound interest is calculated on the principal plus the interest already earned, so it grows faster the longer the money stays invested.
How do I calculate interest for a few months?
Convert the time to years: 18 months is 1.5 years, 90 days is 90 ÷ 365 years. Choose Months or Days above and the calculator does the conversion.
How do I find the rate if I know the interest?
Rearrange the formula: R = SI × 100 ÷ (P × T). For ₹24,000 interest on ₹1,00,000 over 3 years, R = 24,000 × 100 ÷ 3,00,000 = 8%.
How do I calculate simple interest per day?
Divide the annual interest by 365: ₹1,00,000 at 8% earns 8,000 ÷ 365 ≈ ₹21.92 a day. For 90 days, interest = 1,00,000 × 8 × 90 ÷ (100 × 365) ≈ ₹1,973.
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