Simple Interest Calculator
This simple interest calculator works out the interest earned or owed on a principal amount, charged only on the original sum for the entire period — with no compounding. Enter the principal, the annual rate, and the time period to see the interest and the total amount due or earned. Simple interest is the maths behind many short-term loans, some bonds, and any scenario where interest does not itself earn further interest.
The original sum — either money you are lending/investing, or a loan amount, before any interest is added.
The yearly rate applied to the principal. Simple interest is common on short-term loans, some bonds, and certain legal or examination contexts.
The number of years the interest accrues over. Use fractions of a year (e.g. 0.5 for 6 months) for shorter periods.
Interest
₹24,000
The flat amount added for the whole period — e.g. ₹1,00,000 at 8% for 3 years earns exactly ₹24,000, growing in a straight line with time.
What you'd receive (or owe) at the end of the period — your original principal plus the interest above.
The original sum, shown for comparison against the interest and total above.
How to use this simple interest calculator
- 1Principal amount: the original sum — what was borrowed, lent, or invested before any interest.
- 2Annual interest rate: the yearly rate applied. Unlike compound interest, this rate is applied to the same original principal every year, never to a growing balance.
- 3Time period: enter years, using decimals for months (1 month ≈ 0.083 years, 6 months = 0.5 years).
- 4Compare the total here against our compound interest calculator for the same numbers — the gap between the two grows every year, since compounding pays interest on interest and simple interest never does.
Understanding your results
Interest is the flat amount added for the entire period — because it is 'simple', this number grows in a straight line with time, not a curve. Total amount is what you would receive (if lending or investing) or owe (if borrowing) at the end of the period. The key thing simple interest never does is compound: interest earned in year one does not itself earn interest in year two, which is why, over long periods, simple interest always falls further and further behind compound interest on an identical principal and rate.
The formula
I = P × r × t ÷ 100I is the interest, P the principal, r the annual rate as a percentage, and t the time in years. Unlike the compound interest formula, there is no exponent here — the relationship between interest and time is perfectly linear, because each year adds exactly the same amount of interest (P × r ÷ 100), regardless of how many years have already passed. This is what makes simple interest easy to calculate by hand and easy to predict, but also why it is rarely used for long-term savings or investment products, where compounding works strongly in the saver's favour.
A worked example
₹1,00,000 at 8% simple interest for 3 years: interest = 100000 × 8 × 3 ÷ 100 = ₹24,000, for a total amount of ₹1,24,000. Extend the same principal and rate to 5 years and interest becomes ₹40,000 — exactly ₹8,000 more per additional year, a straight line. Compare this to the same ₹1,00,000 at 8% compounded annually for 5 years, which earns roughly ₹46,933 in interest — nearly ₹7,000 more than simple interest over the same period, purely because compounding lets each year's interest start earning its own interest.
Notes for the UK, US and India
Simple interest appears in India mainly in short-term or specific-purpose lending (some gold loans, certain post-office and cooperative-society schemes, and legal/court-ordered interest calculations) and in basic finance and school curricula as the foundational concept before compound interest. In the UK and US, simple interest underlies some short-term bonds, certain promissory notes, and add-on interest auto loans (though most mainstream mortgages, credit cards and savings accounts use compound or reducing-balance methods instead). Always check which method a lender or product actually uses — a 'flat rate' loan is functionally simple interest and typically costs far more than its headline rate suggests once converted to an equivalent reducing/compound rate.
Frequently asked questions
How do I calculate simple interest?+
Use I = P × r × t ÷ 100: principal times the annual rate times the number of years, divided by 100. ₹1,00,000 at 8% for 3 years gives ₹24,000 of interest — use the calculator above for any numbers.
What is the difference between simple and compound interest?+
Simple interest is calculated only on the original principal every period; compound interest is calculated on the principal plus all previously earned interest. Over multi-year periods, compound interest always produces more interest on identical principal and rate.
Is a bank savings account simple or compound interest?+
Almost all modern savings accounts, FDs and loans use compound (or reducing-balance) interest. Simple interest today mostly appears in specific short-term loan products, some bonds, and academic examples — always check your specific product's terms.
Why do some loans quote a 'flat rate' and is that simple interest?+
Yes — a flat-rate loan charges simple interest on the full original amount for the whole tenure, even as you repay principal. A 7% flat rate typically costs about the same as a 13% reducing-balance rate, so always convert before comparing loan offers.
Can simple interest be negative or zero?+
Interest itself cannot be negative in this formula (a negative rate would imply the lender pays the borrower), but it can be zero if the rate or time period is zero — in which case the total amount simply equals the principal.