Simple Interest Calculator
Free Simple Interest Calculator. Calculate simple interest, principal, interest rate, total amount, and investment or loan returns quickly.
What does this Simple Interest Calculator do?
Simple interest is the most straightforward form of interest calculation: it's charged only on the original principal amount, for the entire duration of the loan or investment, with no compounding.
The formula
Simple Interest = (P × R × T) ÷ 100
Where P is the principal, R is the annual interest rate (as a percentage), and T is the time in years. Unlike compound interest, this amount never changes based on interest already accrued — it's a flat, linear calculation.
Step-by-step example
For ₹1,00,000 at 6% annual interest over 3 years: SI = (1,00,000 × 6 × 3) ÷ 100 = ₹18,000. Total amount payable/receivable = 1,00,000 + 18,000 = ₹1,18,000.
Tips & common mistakes
- Simple interest grows linearly (a straight line), while compound interest grows exponentially — over long periods, this difference becomes significant.
- Simple interest is common for short-term loans, some auto loans, and certain bonds — always check which method a lender or product actually uses before comparing rates.
- Don't forget to divide by 100 when the rate is expressed as a percentage — a common manual calculation error.
Frequently asked questions
Simple interest is calculated only on the original principal for the entire term. Compound interest is calculated on the principal plus any interest already earned, so it grows faster over time.