Simple Interest Calculator

Simple interest (SI) is interest calculated only on the original amount, called the principal. Unlike compound interest, the interest earned in one year does not earn more interest in the next year. It is used for many short-term loans, some personal lending between people, and in school and competitive exam maths.

How to use the simple interest calculator

1. Enter the principal amount.
2. Enter the yearly interest rate.
3. Enter the time period in years (use 0.5 for 6 months).

The calculator shows the simple interest and the total amount to be paid or received.

Simple interest formula

SI = P × R × T ÷ 100
Total amount = P + SI

• P = principal
• R = yearly rate of interest in %
• T = time in years

If the time is in months, divide by 12. If it is in days, divide by 365.

Example

You lend ₹1,00,000 at 8% a year for 3 years.

• SI = 1,00,000 × 8 × 3 ÷ 100 = ₹24,000
• Total amount = ₹1,24,000

Finding rate, time or principal

Rearrange the same formula:

R = SI × 100 ÷ (P × T)
T = SI × 100 ÷ (P × R)
P = SI × 100 ÷ (R × T)

Example: ₹50,000 earns ₹6,000 as simple interest in 2 years. The rate is 6,000 × 100 ÷ (50,000 × 2) = 6% a year.

Watch out for "flat rate" loans

Some lenders quote a flat interest rate. Interest is charged on the full original loan for the whole tenure, even though you repay part of it every month. A ₹1,00,000 loan at a 10% flat rate for 3 years costs ₹30,000 in interest, with an EMI of about ₹3,611. The same EMI on a normal reducing-balance loan works out to a rate of about 17.9% a year. Always ask for the reducing-balance rate and compare EMIs with our EMI calculator.