Simple Interest Calculator
Calculate simple interest easily with our free calculator — just multiply principal, rate, and time.
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100₹1.0Cr
0.1%30%
1 years30 years
At a glance
Total Amount (Principal + Interest)
₹1,40,000
Principal₹1,00,000
Simple Interest₹40,000
How to Calculate Simple Interest
In plain words
Simple interest is the most basic way to calculate interest — it is calculated only on the original principal amount. Unlike compound interest, interest is not earned on previously accumulated interest. Simple interest is commonly used for short-term loans, car loans, and education loans in India.
How the calculation works
SI = (P × R × T) / 100
A = P + SI
Where:
SI = Simple Interest
P = Principal Amount
R = Annual Interest Rate (in %)
T = Time Period (in Years)
A = Total Amount (Principal + Interest)A quick example
Let us calculate simple interest for a typical loan:
Principal Amount:₹1,00,000
Annual Interest Rate:8%
Time Period:3 years
Step by step
- 1.SI = (1,00,000 × 8 × 3) / 100
- 2.SI = 24,00,000 / 100
- 3.SI = ₹24,000 total interest
- 4.Total Amount = 1,00,000 + 24,000 = ₹1,24,000
- 5.Annual interest = ₹24,000 / 3 = ₹8,000 per year
So the answer is: Simple Interest = ₹24,000 | Total Amount = ₹1,24,000 | Effective Yield: 8% p.a.
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount. Compound interest is calculated on both the principal and accumulated interest. For long periods, compound interest grows much faster.
Where is simple interest used?
Simple interest is commonly used for short-term loans, car loans, education loans, and some types of bonds and debentures in India.
How do I calculate simple interest monthly?
For monthly calculation: SI = (P × R × T) / (100 × 12) where T is in months. For example, ₹1L at 8% for 6 months: SI = (1,00,000 × 8 × 6) / 1200 = ₹4,000.
What is the formula for simple interest?
Simple Interest = (Principal × Rate × Time) / 100. The total amount = Principal + Simple Interest.