Simple Interest Calculator
Interest on the principal only, and what compounding would have added.
Simple interest is SI = P x R x T / 100, charged on the principal only. Rs 1 lakh at 8% for five years earns Rs 40,000, against Rs 46,933 if the same money compounded annually. Over twenty years the gap widens to more than double.
How this is calculated
Year-by-year breakdown
Free simple interest calculator with the compounding comparison
Simple interest is charged on the original principal only, never on the interest already earned, so it grows in a straight line: SI = P x R x T / 100. This calculator gives you the interest and the maturity value instantly, and then does the thing that actually teaches you something: it draws what the same money would be worth if it compounded instead.
That gap is small over a year and enormous over twenty. Rs 1,00,000 at 8% earns Rs 40,000 of simple interest in 5 years, against Rs 46,933 compounded, a difference of about Rs 6,900. Stretch it to 20 years and simple interest pays Rs 1.6 lakh while compounding pays Rs 3.66 lakh, more than twice as much from the same rate.
Worked example
| Principal | Rate | Years | Simple interest | If compounded |
|---|---|---|---|---|
| Rs 1,00,000 | 8% | 5 | Rs 40,000 | Rs 46,933 |
| Rs 1,00,000 | 8% | 10 | Rs 80,000 | Rs 1,15,892 |
| Rs 5,00,000 | 10% | 20 | Rs 10,00,000 | Rs 28,63,750 |
Where simple interest actually applies
You will meet simple interest more often as a borrower than as a saver: most car and personal loans in India quote a flat rate, which is simple interest on the full original amount for the whole tenure, and that is why a "flat 8%" loan costs roughly the same as a reducing-balance loan at 14 to 15%. Some short-term deposits, treasury bills and bank interest on savings balances also work this way. Long-term investments almost never do, which is the entire point of the second line on the chart.
See the other side in the compound interest calculator, check what a real loan costs in the loan EMI calculator, and price a deposit properly with the FD calculator.
Key facts
| Formula | SI = P x R x T / 100 |
|---|---|
| Maturity value | P + SI |
| Growth shape | Straight line, because interest never earns interest |
| Common use | Flat-rate loans, short-term deposits, treasury bills |
| Flat vs reducing | A flat 8% loan costs about 14 to 15% on a reducing balance |
How to use the Simple Interest Calculator
- Enter the principal amount.
- Set the annual interest rate.
- Set the time period in years.
- Read the simple interest and the maturity value in the result cards.
- Compare them with the dashed line and the compounding figures, which show the same money compounded annually.
- Turn on inflation to see what the maturity value is worth in today's purchasing power.
Sources
Last reviewed and updated: 23 August 2026. Estimates only, not financial or tax advice.
Frequently asked questions
What is the formula for simple interest?
SI = P x R x T / 100, where P is the principal, R the annual rate in percent and T the time in years. The maturity value is P + SI. Interest is always charged on the original principal, never on interest already earned.
What is the difference between simple and compound interest?
Simple interest is calculated on the principal alone, so it grows in a straight line. Compound interest is calculated on the principal plus all interest already added, so it curves upward. At 8% for 20 years, Rs 1 lakh earns Rs 1.6 lakh of simple interest but Rs 3.66 lakh compounded.
Where is simple interest used in India?
Mostly in borrowing. Flat-rate car, two-wheeler and personal loans charge simple interest on the full original amount for the whole tenure, which makes the effective reducing-balance rate almost double the quoted flat rate. Some short-term deposits and treasury instruments also use it.
Is a flat interest rate the same as simple interest?
Yes, and it is why flat rates look cheap. A flat 8% loan charges 8% of the full original principal every year even though you have repaid much of it, so the true reducing-balance cost is roughly 14 to 15%. Always compare loans on the reducing-balance rate.
Is this simple interest calculator free?
Yes, free with no sign-up or ads, and it works in both rupees and dollars.