Simple Interest Calculator
Simple interest is interest worked out on the original amount only, so the same interest accrues every year. Enter the principal, the annual interest rate and the time in years, months or days to see the interest and the total amount — shown next to what annual compounding would give on the same terms.
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Enter your figures and select Calculate.
Simple interest
–
- Principal–
- Total (principal + interest)–
- Interest per year–
- Time in years–
| Same terms | Interest | Total |
|---|---|---|
| Simple interest | – | – |
| Compounded annually | – | – |
Rounded to two decimal places. Days are converted using a 365-day year.
Please note: this applies the simple-interest formula to the figures you enter. Lenders and banks may use a 360-day year, charge fees, or compound interest instead, which changes the result. Check the terms of the specific product. This is general information, not financial advice.
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What is simple interest?
Simple interest is calculated on the original principal only. Interest does not get added to the balance to earn further interest, so the same amount accrues every year. It is the easiest interest to calculate, and it still shows up in real products: some short-term loans, bonds and deposits that pay interest out rather than reinvesting it, and — importantly — “flat-rate” loan quotes.
How simple interest is calculated
Key terms and time units
- Principal — the amount lent, borrowed or deposited (P).
- Rate — the annual interest rate (r), as a percentage.
- Time — entered in years, months or days. The calculator converts it to years: months ÷ 12, or days ÷ 365. So 18 months is 1.5 years and 90 days is about 0.2466 years.
- Interest — I = P × r × t, the same amount for every year of the term.
- Total amount — principal + interest.
Examples
Years. ₹50,000 at 7% for 3 years — the default values:
Compounded annually instead, the same terms give 50,000 × 1.07³ = ₹61,252.15 — ₹752.15 more, because the second and third years' interest is earned on interest too.
Days. ₹1,00,000 at 10% for 90 days: I = 1,00,000 × 0.10 × 90 ÷ 365 = ₹2,465.75. On a 360-day basis, which some lenders use, the same loan would cost ₹2,500.00 — a small difference that is worth knowing exists.
Simple interest vs compound interest
With simple interest the balance grows by the same amount every year. With compound interest, interest is added to the balance and earns interest itself, so the gap widens over time. ₹1,00,000 at 8%, with compound interest added once a year:
| Period | Simple interest total | Annual compound total | Difference |
|---|---|---|---|
| 1 year | ₹1,08,000.00 | ₹1,08,000.00 | ₹0.00 |
| 3 years | ₹1,24,000.00 | ₹1,25,971.20 | ₹1,971.20 |
| 5 years | ₹1,40,000.00 | ₹1,46,932.81 | ₹6,932.81 |
| 10 years | ₹1,80,000.00 | ₹2,15,892.50 | ₹35,892.50 |
| 20 years | ₹2,60,000.00 | ₹4,66,095.71 | ₹2,06,095.71 |
Over one year the two are equal. Under a year, simple interest is slightly higher: for 6 months it gives ₹1,04,000.00 against ₹1,03,923.05 with annual compounding. Over longer periods compounding pulls ahead. For other compounding frequencies, use the compound interest calculator; our guide to the effective annual rate explains how frequency changes the yearly figure.
Where simple interest can mislead: flat-rate loans
Some lenders quote a flat rate: simple interest on the original loan amount for the whole term, even though you are repaying it month by month. Because you are charged interest on money you have already paid back, a flat rate is far more expensive than the same number quoted as a normal reducing-balance rate.
Example: ₹6,40,000 over 5 years at a 5% flat rate.
A reducing-balance loan with the same monthly payment has an annual rate of about 9.15%. So a “5% flat” quote costs roughly what a 9.15% loan costs. When comparing offers, convert any flat rate to its reducing-balance equivalent first — the car loan calculator and EMI calculator both use reducing-balance rates, so you can compare their monthly figure against the flat-rate quote. Our guide to APR vs interest rate vs flat rate puts all three measures side by side, including where an APR or comparison rate fits.
Related calculators and guides
- Repaying a loan in monthly instalments? The EMI calculator uses the reducing-balance method most lenders use, and the car loan calculator starts from a vehicle price and down payment.
- Comparing loan quotes? Our guide to APR, interest rates and flat rates works through one loan quoted all three ways.
- Investing rather than lending? The investment return calculator projects growth with regular contributions and fees.
Assumptions and limitations
- A single fixed rate and no repayments during the period (except where the flat-rate example says otherwise).
- Days use a 365-day year; months are treated as exactly one-twelfth of a year.
- No fees, taxes or penalties.
- The compound comparison compounds once a year. For other frequencies, use the compound interest calculator.
Simple interest questions, answered
What is simple interest?
Interest calculated only on the original principal. It is not added to the balance to earn more interest, so the same amount accrues every year of the term.
How is simple interest calculated?
Interest = principal × annual rate × time in years; the total is the principal plus that interest. ₹50,000 at 7% for 3 years gives ₹10,500.00 of interest and ₹60,500.00 in total. Time in months is divided by 12, and time in days by 365.
What is the difference between simple and compound interest?
Simple interest is earned only on the principal; compound interest is also earned on interest already added. On the same ₹50,000 at 7% for 3 years, annual compounding gives ₹61,252.15 against ₹60,500.00 with simple interest.
Does simple interest depend on compounding?
No. There is no compounding in simple interest, so the compounding frequency does not affect it — only the principal, the rate and the time do. The compound figure shown alongside is for comparison only.
When is simple interest used instead of compound interest?
Simple interest appears where interest is not added back to the balance: some short-term loans, deposits or bonds that pay interest out periodically, and flat-rate loan quotes. Most savings accounts and most credit products compound, so check the terms of the specific product.
How do I calculate simple interest for a number of days?
Divide the days by 365 to get the time in years, then use I = P × r × t. For ₹1,00,000 at 10% for 90 days, that is 1,00,000 × 0.10 × 90 ÷ 365 = ₹2,465.75. Some lenders divide by 360, which gives a slightly higher figure, so check which convention applies.
Why is a flat-rate loan more expensive than it looks?
A flat rate charges interest on the original amount for the entire term, even as you repay it. On a 5-year loan, a 5% flat rate costs about the same as a 9.15% reducing-balance rate. Always ask for the reducing-balance equivalent before comparing a flat-rate quote with other offers.
Is my data sent anywhere?
The calculation runs entirely in your browser using JavaScript on this page; the figures you type are not sent to our server, stored, or saved between visits. Only if you choose to open the detailed report are the principal, rate, time, time unit and the display currency sent to our server, so that the report can be calculated there. If you buy a report, payment is handled by Razorpay and those figures are kept with the order so you can open the report again. No name, email address or phone number is asked for.