Simple Interest Calculator
Calculate simple interest on a principal for any rate and period, and see how it compares with compound interest over the same term.
Simple Interest
₹40,000
on ₹1,00,000 at 8% for 5 years
Total amount (P + SI)
₹1,40,000
Compound interest, same inputs (annual)
₹46,933
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Tools that naturally follow this calculation.
Simple vs compound growth
- Compound (annual)
- Simple interest
Year-by-year
| Year | Simple Interest | Total |
|---|---|---|
| 1 | ₹8,000 | ₹1,08,000 |
| 2 | ₹16,000 | ₹1,16,000 |
| 3 | ₹24,000 | ₹1,24,000 |
| 4 | ₹32,000 | ₹1,32,000 |
| 5 | ₹40,000 | ₹1,40,000 |
Example calculation
₹1,00,000 × 8% × 5 years ÷ 100 = ₹40,000 of simple interest, so the total becomes ₹1,40,000. With annual compounding instead, the interest over the same period would be about ₹46,933.
Simple interest formula
SI = P × R × T / 100
where P is the principal, R the annual interest rate in percent and T the time in years. The total amount is P + SI.
Where simple interest is used
Simple interest appears in short-term loans, some deposit products, informal lending, and as a teaching baseline. Most bank deposits and loans in India actually compound, so always check which method a product uses.
Simple vs compound interest
Simple interest is charged only on the original principal, so it grows in a straight line. Compound interest also earns interest on past interest, so the gap between the two widens every year — the comparison figure above shows this for your inputs.
Assumptions & Limitations
- •Interest is calculated only on the original principal.
- •The rate stays constant for the whole period.
- •Fractional years are allowed and pro-rated linearly.
Frequently asked questions
Methodology last reviewed: 1 June 2026