Calculators
Simple Interest Calculator
Interest that doesn't compound.
About the Simple Interest Calculator
The Simple Interest Calculator works out interest charged or earned only on the original amount. Set the principal, rate and time in months, years or days with sliders, and it shows the interest, the total, the monthly interest, a year-by-year chart and how much more compound interest would earn.
What you can do with the Simple Interest Calculator
- Sliders for everything: Principal, rate and time in days, months or years.
- Monthly interest: See the interest per month too.
- Year-by-year chart: Watch the total grow.
- Compare with compound: See how much more compound interest would earn.
How simple interest works
With simple interest, the interest is the same every year because it's always calculated on the original principal. ₹1,000 at 5% for 3 years earns ₹50 a year, ₹150 in total. Compound interest adds each year's interest to the balance first, which is why the comparison bar is longer.
Watch out for "flat rate" loans
Some personal and vehicle loans quote a flat interest rate, which charges interest on the full original amount for the whole term, even as you repay it. That makes a flat rate look much cheaper than it is, a 3-year loan at 10% flat costs about the same as a normal reducing-balance loan at nearly 18% a year. Always ask for the reducing-balance rate, or compare EMIs with the Loan / EMI Calculator.
Where simple interest is used
It's common for short-term loans, some bonds and informal lending between people, and it's the standard way interest is taught in school maths.
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Frequently Asked Questions
What's the formula for simple interest?
I = P × R × T, where P is the principal, R the yearly rate as a decimal, and T the time in years.
How do I calculate interest for months or days?
Pick Months or Days under the time slider and the calculator converts it to years for you.
Is simple or compound interest better?
For savings, compound interest earns more. For borrowing, a genuine simple-interest loan costs less, but check that a "flat" rate isn't hiding a much higher real rate.
How do I calculate interest for a number of days?
Choose Days and enter the number of days. The tool uses principal x yearly rate x days / 365. For example, 50,000 at 12% for 90 days earns 50,000 x 0.12 x 90 / 365 = about 1,479.45 in interest.
What does 2 rupees interest per month mean?
In informal lending, "2 rupees" or "2 rupaye sankda" means 2 per 100 each month, which is 2% a month or 24% a year in simple interest. 1 rupee per month is 12% a year. Enter the yearly figure in the rate slider.
What is a flat interest rate and how does it compare with a reducing rate?
A flat rate charges interest on the full loan amount for the whole tenure, like simple interest. A 1 lakh loan at 10% flat for 3 years costs 30,000 in interest, which equals about 17.9% on a reducing balance. Ask the lender which method they use.
How do I find the rate if I know the interest?
Rearrange the formula: rate = interest x 100 / (principal x years). If 1,00,000 earned 24,000 in 3 years, the rate is 24,000 x 100 / 3,00,000 = 8% a year. This tool calculates interest, so you can confirm the rate by entering it.
How is the interest per month worked out?
It is principal x yearly rate / 12, the interest that builds up each month under simple interest. For 1,00,000 at 8%, that is about 666.67 a month. It stays the same every month because interest is never added to the principal.
Where is simple interest used in India?
Simple interest is common in short-term and informal loans, many gold loans, some vehicle loans quoted at flat rates, and interest on overdue payments. Bank FDs and most home and personal loans use compounding or reducing balances, so check the terms.
What range of values can I enter?
The principal slider goes from 1,000 to 1 crore rupees, the yearly rate from 0.5% to 36%, and the time from 1 to 360 in months, years or days. You can type exact values in the boxes beside each slider.
Why does the year-by-year chart not appear for short periods?
The chart shows interest building up by year, so it appears only when the time is one year or more. For a few months or days, read the interest, total amount and monthly interest in the boxes above instead.
Read the guide
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