Simple Interest Calculator
Calculate simple interest and total repayment from principal, rate and time.
Principal Amount
Annual Interest Rate
Time Period
Total Amount
₹1,40,000
Total Amount
₹1,40,000
Principal
₹1,00,000
Simple Interest
₹40,000
How this calculator works
Simple interest is calculated only on the original principal for the entire term: Interest = P × R × T / 100, where P is the principal, R is the annual rate, and T is the time in years. Unlike compound interest, it never earns interest on interest already accumulated, so it grows in a straight line rather than accelerating over time.
The gap versus compound interest
₹1,00,000 at 8% for 10 years earns exactly ₹80,000 in simple interest (total ₹1,80,000). The same principal, rate and term under annual compound interest instead grows to ₹2,15,892 — a difference of nearly ₹36,000, purely from interest earning its own interest along the way. That gap widens further the longer the term runs.
Where simple interest is actually used
Simple interest shows up in short-term and consumer loans (some personal and car loans calculate interest this way), certain bonds, and a handful of fixed-term instruments — it's more common where the lender wants predictable, easy-to-verify interest rather than compounding growth. Most savings and investment products (FDs, RDs, PPF, mutual funds) compound instead, which is why they're better long-term wealth-building tools at the same stated rate.
Comparing your options
If you're deciding between a simple-interest option and a compounding one at similar rates, the Compound Interest Calculator lets you see exactly how much further ahead compounding would put you over the same term.
Frequently Asked Questions
What's the formula for simple interest?
Interest = P × R × T / 100, where P is the principal, R is the annual interest rate, and T is the time in years. Total repayment is the principal plus this interest.
When is simple interest used instead of compound interest?
Simple interest is common for short-term loans, certain car loans, and some fixed-term instruments where interest doesn't compound. Most savings products (FDs, RDs, PPF) use compound interest instead, which grows faster over the same term.
Does simple interest grow linearly?
Yes — since interest is only ever calculated on the original principal, the total grows in a straight line over time, unlike compound interest which accelerates as interest starts earning its own interest.
How much less is simple interest than compound interest?
It depends on the rate and term, but the gap can be substantial — ₹1,00,000 at 8% for 10 years earns exactly ₹80,000 in simple interest, versus about ₹1,15,892 in interest under annual compounding on the same principal, rate and term. The gap widens the longer the term runs.
Can I use this for a loan I'm taking rather than an investment I'm making?
Yes — the same formula applies either way. Enter the loan principal, rate and term to see the total simple interest owed and the full repayment amount.
This tool provides general estimates for informational purposes only and isn't financial or tax advice. Consult a qualified financial advisor or tax professional before making financial decisions.