Simple Interest Calculator
Simple interest is paid only on the original amount you put in — the interest never earns interest of its own. It is how many short-term deposits, gold loans and vehicle loans are priced, and the arithmetic is honest enough to do on the back of an envelope. This page computes the interest, the amount you receive at maturity, and the distance a yearly-compounding deposit would have pulled ahead over the same term.
Enter values
Results
- Simple interest
- ₹40,000.00
- Amount at maturity
- ₹1,40,000.00
- Extra interest if compounded yearly
- ₹6,932.81
How is the Simple Interest calculated?
Enter the principal — the sum you deposit or borrow — then the annual rate and the number of years the money stays put. The calculator multiplies principal by rate by time and divides by 100 to give the interest in rupees, adds it back to the principal for the maturity amount, and runs the identical inputs through yearly compounding so you can see how much that would have added on top.
Formula
SI = P × R × T ÷ 100, and the amount at maturity is A = P + SI. P is the principal in rupees, R is the rate of interest per year in percent, and T is the time in years. Because interest is charged on the original principal alone, doubling the term exactly doubles the interest — the growth is a straight line rather than a curve.
Example
Put ₹1,00,000 in a simple-interest deposit at 8% for 5 years. Interest = 1,00,000 × 8 × 5 ÷ 100 = ₹40,000, so you receive ₹1,40,000 at maturity. Compound the same deposit yearly at the same 8% instead and it grows to about ₹1,46,933 — ₹6,933 more. That gap looks modest over five years and turns into serious money over twenty.
Things to remember
Simple interest is predictable: what you see is what you earn, month after month. Long tenures leave money on the table, so compare the maturity figure with the compound interest calculator before renewing. On reducing-balance loans the quoted rate works differently — check the effective rate before you sign.
Frequently Asked Questions
How do I calculate simple interest by hand?
Multiply the principal by the rate and by the number of years, then divide by 100. On ₹1,00,000 at 8% for 5 years that is 1,00,000 × 8 × 5 ÷ 100 = ₹40,000. For a term given in months, use the months divided by 12 in place of the years.
Where is simple interest used in India?
Fixed deposits can be booked on a simple-interest basis, and many gold, vehicle and personal loans quote a flat rate on the original principal. Savings accounts and most FDs compound instead, so ask whether the quoted rate is flat or compounding before comparing two offers.
Can simple interest ever beat compound interest?
Not for the same principal, rate and term — compounding adds interest on interest, so its result is always at least as large. The two amounts are equal only when the rate is 0% or the term is still zero years.
Is simple interest cheaper on a loan?
Usually yes, because nothing accrues on interest you have not yet paid. Compare on rupees rather than percentages: over 20 years at 8%, yearly compounding pays ₹3.66 lakh per lakh while simple interest pays ₹1.60 lakh — the reverse of that gap is what a compounding loan costs.
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