Simple Interest Calculator

What is Simple Interest?

Simple interest is calculated only on the original principal — not on any accumulated interest. Each year you earn exactly the same amount of interest regardless of how much has built up. The formula is: SI = (P × R × T) / 100, where P is the principal, R is the annual rate as a percentage and T is the time in years. Total amount = P + SI. This calculator also shows a live side-by-side comparison with compound interest on the same values.

Simple Interest vs Compound Interest

With simple interest you earn a fixed amount each period. With compound interest you earn interest on both principal and accumulated interest, so growth accelerates over time. For a ₹1 lakh principal at 10% for 20 years: simple interest gives ₹3 lakh total; annual compound interest gives ₹6.73 lakh — more than double. For borrowers, however, simple interest loans are cheaper than compound interest loans at the same rate. See our Compound Interest Calculator to compare both on the same amount.

Where Simple Interest Is Used

• Short-term personal loans: Some banks and NBFCs use simple interest for loans under 1 year.
• Vehicle loans: Certain lenders apply simple interest on the declining principal balance.
• Treasury Bills: Short-term government securities use simple interest for discount calculations.
• Trade credit: Business-to-business credit often uses simple interest on outstanding invoices.

SI vs CI — Side-by-Side at 10% p.a. on ₹1 Lakh

Finding Principal, Rate or Time from SI

The formula works in reverse for any missing variable: P = (SI × 100) / (R × T) to find principal, R = (SI × 100) / (P × T) to find the rate, and T = (SI × 100) / (P × R) to find the time. If you know the total amount but not SI, first subtract the principal: SI = Total Amount − Principal. For FD planning, use our FD Calculator which handles both simple and compound interest with quarterly compounding.

✓Verified by ToollyX Team · Last updated June 2026