Interest & Basics
Simple Interest
Calculate simple interest
About the Simple Interest calculator
Free Simple Interest Calculator to calculate interest on principal amount. Learn simple interest formula, calculate SI for loans and investments. Compare simple vs compound interest with our easy-to-use simple interest calculator.
How the maths works
Simple Interest Formula
SI = (P × R × T) / 100- SI
- Simple Interest
- P
- Principal amount
- R
- Annual interest rate
- T
- Time period in years
A worked example
Simple Interest Example
| Principal | ₹50,000 |
| Interest Rate | 6% per annum |
| Time Period | 3 years |
Simple Interest: ₹9,000
How to use it
- Enter the principal amount
- Input annual interest rate
- Specify time period in years
- Get simple interest and total amount
What it accounts for
- Calculate simple interest easily
- Understand basic interest concepts
- Compare with compound interest
- Quick calculations for short-term loans
- Educational tool for interest learning
Why it is worth working out
- Easy to understand and calculate
- Predictable interest earnings
- Useful for short-term calculations
- Foundation for financial literacy
Questions people ask
When is interest actually simple rather than compound?
Rarely, in retail finance. Some short-term personal and gold loans, most car loans quoted on a flat basis, and certain government instruments use simple interest. Almost everything else compounds. If a lender quotes a "flat rate", that is simple interest and the effective rate is roughly double.
Why is a flat rate misleading?
A flat rate charges interest on the original amount for the whole term, even though you have been repaying principal all along. A car loan quoted at 7% flat over five years has an effective reducing-balance rate of about 13%. Always ask for the reducing-balance rate before comparing offers.
How much difference does compounding make?
₹1,00,000 at 10% for 20 years is ₹3,00,000 under simple interest and ₹6,72,750 compounded annually. Over short periods the gap is small; over long ones it is the whole story.
Read more on this
- Simple versus compound interest — and which one your product actually uses — Lenders quote whichever is more flattering. Knowing which convention applies tells you what a deposit really earns and what a loan really costs.
This calculator is for information and education. It is not financial advice — see the disclaimer.