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FinCalc India

Simple Interest Calculator

Simple interest is charged only on the original principal, never on accumulated interest. It is common for short-term loans, some vehicle and gold loans, and many informal lending arrangements.

Enter the principal, the annual rate and the time in years.

Assumptions used
  • Time is entered in whole or fractional years.
  • Rate is constant over the period.

Enter your details

₹
11,00,00,00,000
%
140
years
150

Results

Simple Interest

₹50,000

Total Amount (Principal + Interest)
₹1,50,000
  • Principal₹1.00 L(67%)
  • Interest₹50.0 K(33%)

Simple interest formula

SI = P × R × T ÷ 100

  • P = principal
  • R = rate of interest per annum (%)
  • T = time in years

Total amount = P + SI.

Worked example

  1. Principal ₹1,00,000, rate 10% p.a., time 5 years.
  2. SI = 1,00,000 × 10 × 5 ÷ 100 = ₹50,000.
  3. Total amount = ₹1,50,000.

Simple vs compound interest

Compound interest pulls ahead because it also earns interest on past interest.
YearSimple interest (₹1,00,000 @ 10%)Compound interest (annual)
1₹10,000₹10,000
2₹20,000₹21,000
3₹30,000₹33,100
5₹50,000₹61,051
  • Simple interest grows linearly; compound interest grows faster over time.
  • For time periods under a year, convert months to a fraction of a year (e.g. 9 months = 0.75).
  • When you are the borrower, simple interest is cheaper; when you are the investor, compounding is better.

Where simple interest is used

Many gold loans, some short-tenure personal and vehicle loans, and inter-personal loans use simple interest. Bank deposits and most long-term loans use compounding.

This calculator is for education and illustration only. Results are estimates based on the inputs and assumptions shown and are not financial, investment, tax or legal advice. Verify figures with your bank, a registered adviser or the relevant government department before acting.

Frequently asked questions

What is simple interest?

Interest calculated only on the original principal for the entire period. It does not add earned interest back to the principal, so it grows in a straight line.

How do I calculate simple interest for months?

Express the time in years as a fraction. For 9 months use T = 9/12 = 0.75 in the formula SI = P × R × T ÷ 100.

Is simple or compound interest better for a borrower?

Simple interest, because you never pay interest on interest. For the same rate and period, a simple-interest loan costs less than a compound-interest one.

Do banks use simple interest on FDs?

Generally no. Cumulative fixed deposits compound (usually quarterly). Simple interest on deposits is uncommon and mainly seen on some short-tenure or non-cumulative products.

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