Simple Interest Calculator
Calculate simple interest on a principal amount. Enter the principal, annual rate and time period to see the interest and total amount.
Principal
₹1.00 L
Total Interest
₹40,000
Total Amount
₹1.40 L
Principal vs Interest
Simple interest is calculated only on the principal amount. Most bank deposits use compound interest instead.
What is simple interest?
Simple interest is interest charged or earned only on the original principal, not on accumulated interest. It is the classic introductory interest formula - used for short-term loans, certain bonds, and as a building block for understanding compound interest. For a deposit at simple interest, your interest amount is the same every year. For compound interest, by contrast, the interest amount grows because the previous year's interest is added to the principal. Simple interest is widely used in personal lending, partial payment schedules and academic problems.
How to use the Simple Interest Calculator
- Enter the principal. The original amount borrowed or invested.
- Enter the annual rate. Use the annual interest rate as a percentage.
- Enter the time. Years (use a decimal for fractional years).
- Read the simple interest. Total interest accrued over the period.
- Read the total amount. Principal + simple interest.
Formula and method
P is principal, R is annual rate (as a percentage), T is time in years. There is no compounding - the interest earned in one year never starts earning interest itself.
When simple interest applies
- Many short-term personal loans. Especially informal lending and small ticket sizes.
- Certain corporate bonds. Coupon-bearing instruments compute coupons on face value.
- Education problems. The foundation for understanding compound interest.
- Quick mental maths. Easier to estimate than compound for short periods.
- Comparison baseline. Side-by-side with compound interest to show why compounding wins long-term.