Calculate simple interest on loans, deposits, and investments. Get instant results with our free SI calculator.
Where P = Principal, R = Rate (% per annum), T = Time (years)
Principal Amount
₹1,00,000
Simple Interest
₹18,000
Total Amount
₹1,18,000
💰 Principal + Interest = Total Amount
📊 Interest Rate: 6% per annum
⏱️ Time Period: 3 years
Simple Interest (SI) is a method of calculating interest on the original principal amount only. Unlike compound interest, simple interest does not include interest on accumulated interest from previous periods.
The formula for simple interest is straightforward: SI = (P × R × T) / 100, where P is the principal amount, R is the annual interest rate, and T is the time period in years.
Simple interest is commonly used for short-term loans, certain types of deposits, and educational calculations. It's easier to understand and calculate compared to compound interest.
Use the formula: SI = (P × R × T) / 100. For example, on ₹1,00,000 at 6% for 3 years: SI = (100000 × 6 × 3) / 100 = ₹18,000. Total amount = ₹1,00,000 + ₹18,000 = ₹1,18,000.
Simple interest is calculated only on the principal amount throughout the loan period. Compound interest is calculated on the principal plus accumulated interest, resulting in higher total interest over time.
Some education loans, short-term personal loans, and certain business loans use simple interest. However, most home loans, car loans, and credit cards use compound interest (reducing balance method).
Yes! Convert time to years: For 6 months, use T = 0.5 years. For monthly rate, use R/12 and T in months. Example: 6% annual = 0.5% monthly.
For borrowers, simple interest is better as total interest paid is less. For investors/savers, compound interest is better as it generates higher returns. The choice depends on whether you're lending or borrowing.
Explore compound interest, EMI, SIP, and more financial calculators
Instantly calculate interest on personal loans, car loans, or short-term borrowings. Perfect for understanding the true cost of borrowing before taking a loan.
Estimate returns on bank FDs, corporate deposits, or short-term investment instruments that use simple interest calculations for accurate financial planning.
Calculate interest during moratorium periods on education loans. Understand how much interest accumulates while you're still studying before repayment begins.
For businesses offering credit terms to customers or taking short-term working capital loans. Calculate interest for accurate cash flow projections.
Unlike compound interest, simple interest is straightforward and easy to understand. See exactly how your interest is calculated with no hidden complexities.
Evaluate different loan offers side by side. Compare interest rates, terms, and total interest amounts to make the most cost-effective borrowing decision.
💡 Pro Tip: Simple interest is commonly used for car loans, personal loans, and short-term deposits. For long-term investments, compound interest typically offers better returns!
Simple interest is calculated on the principal amount only, not on accumulated interest. The formula is: Interest = (Principal × Rate × Time) / 100. For example, ₹10,000 at 8% for 2 years gives ₹1,600 interest (10,000 × 8 × 2 / 100).
Simple interest is calculated only on the principal amount throughout the loan/investment period. Compound interest is calculated on principal plus accumulated interest. For example, ₹1 lakh at 10% for 3 years: Simple Interest = ₹30,000, Compound Interest = ₹33,100. The difference increases with time.
Car loans, personal loans, and some education loans often use simple interest calculations. Many short-term business loans, payday loans, and installment loans also use simple interest. However, always verify with your lender as calculation methods can vary.
Most bank FDs use compound interest (quarterly compounding), not simple interest. However, some short-term company deposits or specific FD schemes might use simple interest. Always check the terms before investing. Our calculator helps estimate returns for simple interest instruments.
Yes! Enter the time in decimal format. For example: 6 months = 0.5 years, 3 months = 0.25 years, 18 months = 1.5 years. The calculator works for any time period, whether days, months, or years - just convert to years.
If you know the interest amount, rate, and time, you can find the principal using: Principal = (Interest × 100) / (Rate × Time). For example, if you earned ₹5,000 interest at 10% for 2 years, the principal was ₹25,000.
Use the formula: Rate = (Interest × 100) / (Principal × Time). For example, if you paid ₹12,000 interest on a ₹1 lakh loan over 3 years, the interest rate was 4% per annum [(12,000 × 100) / (100,000 × 3) = 4%].
Simple interest is generally better for borrowers compared to compound interest, as you pay less total interest over time. For lenders/investors, compound interest yields better returns. That's why loans often use compound interest while some deposits use simple interest.
No, this calculator shows gross interest before taxes. Interest earned on deposits is taxable as per your income tax slab. Banks deduct TDS if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Consult a tax advisor for post-tax calculations.
This calculator is not designed for EMI loans. Most EMI loans (home, car, personal) use the reducing balance method with compound interest. For EMI calculations, you need a dedicated EMI calculator that factors in monthly payments and reducing principal balance.
Understand your loan type: Before using this calculator, confirm with your lender whether your loan uses simple or compound interest. Most home loans and credit cards use compound interest, while many car loans use simple interest.
Convert time periods correctly: Always convert months or days to years for accurate calculations. Remember: 1 month ≈ 0.0833 years, 6 months = 0.5 years, 90 days ≈ 0.25 years. This ensures your interest calculations are precise.
Compare before borrowing: Use this calculator to compare multiple loan offers. Even a 1% difference in interest rate can save thousands over the loan term. Always calculate total payable amount (principal + interest) before deciding.
Plan early repayment: With simple interest loans, paying off principal early can significantly reduce total interest. Since interest is calculated only on principal, reducing it sooner means less interest overall.
Factor in processing fees: While this calculator shows pure interest, real loans have processing fees, GST, and other charges. Add these to get the true cost of borrowing. Sometimes a slightly higher interest rate with lower fees is better.
Use for financial planning: When planning short-term investments or deposits, this calculator helps set realistic return expectations. For long-term goals, consider compound interest instruments for exponentially better returns.
Remember tax implications: Interest paid on certain loans (like home loans) offers tax benefits under Section 24 and 80EE. Interest earned on deposits is taxable. Factor in these tax considerations for accurate financial planning.
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