Simple interest is the most basic form of interest - calculated only on the original principal, never on accumulated interest. Use this calculator for short-term loans, quick deposit estimates, hand-loans, school problems and any case where compounding does not apply.
Time unit
= 3.00 years
Simple interest
₹24,000.00
P × R × T / 100
Total amount
₹1,24,000.00
Principal + interest
Effective term
3.00 yr
Principal vs. Interest
Formula used: SI = (P × R × T) / 100
₹1,00,000 × 8% × 3.00 = ₹24,000.00
Simple interest is the linear model used by short-term loans and some post-office schemes. For deposits and most modern products, use the compound interest calculator for a realistic estimate.
Часть содержимого пока показывается на английском.
Simple interest is the foundation every Indian student learns in school and the formula a surprising number of real-world products still use. Most modern bank deposits use compound interest, but several common products quote simple interest: many post-office schemes, short-tenure gold loans (typically less than 12 months), certain personal vehicle loans, almost all informal hand-loans, and the interest portion on most government bonds (with the principal repaid in lump-sum at maturity). Knowing whether your loan is simple or compound is the difference between a 7% rate that costs ₹70,000 a year and one that effectively costs ₹85,000.
This calculator handles the textbook formula exactly - interest on principal only, no compounding, linear growth with time. The output matches anything from school NCERT problems to MCLR-linked personal-loan calculations to gold-loan EMIs. If you're computing on a loan or deposit and the bank's stated maturity differs from this calculator's number, the most likely reason is that the product actually uses compound interest (use the compound-interest calculator) or has a flat-rate quotation that hides a much higher effective rate.
Enter the principal amount (P).
Enter the annual interest rate (R) in percent.
Enter the time period (T) in years.
The calculator instantly shows the interest earned and the total amount payable.
Simple interest grows linearly with time. If you double the tenure, the interest doubles. If you double the rate, the interest doubles. There is no compounding - interest does not earn interest. This is the opposite of compound interest, where the principal itself grows each period.
SI = (P × R × T) / 100 ; A = P + SI
The simple interest formula SI = PRT/100 is consciously linear: each year you earn (or owe) the same fixed interest amount. Year 1 of a ₹1 lakh deposit at 8% earns ₹8,000; year 5 also earns exactly ₹8,000. Compare with compound interest at 8% where year 1 earns ₹8,000 but year 5 earns ₹10,884 because the prior years' interest is now also earning interest.
The 'flat rate' that some lenders quote for car and gold loans is mathematically simple interest. A 'flat 7% over 5 years' on a ₹5 lakh loan computes interest as 5,00,000 × 7% × 5 = ₹1,75,000, divided over 60 EMIs as ₹3,750/month plus principal ₹8,333 = ₹12,083 EMI. The reducing-balance equivalent of that flat 7% is roughly 13% - nearly double. Always convert flat rates to reducing-balance terms before comparing across loans.
Time conversion is the most-frequent source of confusion. Months must be divided by 12, days by 365 (or 360, depending on convention). Some bank rates use the '365-day' convention; some use '360-day'. The difference is small (~1.4%) but matters on long tenures or large amounts.
T = 9/12 = 0.75 years. SI = 2,00,000 × 12 × 0.75 / 100 = ₹18,000. Total payable at maturity ₹2,18,000. Most gold loans charge interest monthly on a simple basis; the 9-month tenure yields a clean linear interest charge.
T = 1.5 years. SI = 50,000 × 10 × 1.5 / 100 = ₹7,500. Total ₹57,500. Many informal lender-borrower agreements use simple interest because of its predictability - easy to compute, easy to settle, no surprise compounding.
Short-term personal loans, gold loans, post-office monthly income schemes, certain car loans and informal hand-loans typically use simple interest. Bank deposits and most modern loans use compound interest.
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously accumulated interest, so it grows much faster over time.
Yes - convert months to years (months / 12) before entering. A 6-month period is 0.5 years.
Yes. Interest earned on most simple-interest products is taxable as income from other sources at your slab rate.
If you are an investor, compound interest is better because your money grows faster. If you are a borrower, simple interest costs less for the same headline rate.
By convention, yes. Always check whether a rate is per year, per month or per day before plugging it into the formula.
Indian financial products - home loans, fixed deposits, mutual funds, NPS, insurance - each carry their own quirks: monthly reducing balance vs flat-rate interest, quarterly vs monthly compounding, indexation on capital gains, the choice between the old and new tax regime. We design every finance calculator to use the formula that an Indian bank, AMC, or insurer would actually use, and to surface the assumptions in plain English so you can audit the result against your own statement.
Use this calculator alongside the EMI, SIP and inflation calculators to plan your money holistically. A standalone EMI number means little until you compare it with your in-hand salary, your existing debt-to-income ratio, and the impact of inflation on the real cost of the loan. The related-tool grid below makes it one click to chain these analyses together.
The Simple Interest Calculator is part of the Finance suite on Online Calculator Tools, alongside 6 related calculators. All tools share the same UI patterns, the same privacy-first rendering (nothing is sent to a server), and the same commitment to showing the formula and assumptions behind every result.
