This simple interest calculator finds the interest on a sum when interest is charged only on the original amount, never on past interest. Enter principal, yearly percentage and duration (decimals work). You see the interest, the amount due at the end, and the monthly and yearly interest.
Simple interest is used for many private loans, some staff and cooperative loans, and school maths problems. It is also the honest starting point for checking any interest figure in your head.
At a glance
- FormulaSI = P × R × T ÷ 100
- AmountA = P + SI
- Example₹2 lakh at 8% for 3 years: ₹48,000
- Per monthP × R ÷ 1,200
- For daysP × R × days ÷ 36,500
- GrowsIn a straight line, the same every year
Simple interest formula with an example
SI = P × R × T ÷ 100
P is the principal in rupees, R the rate per year in percent and T the time in years. For ₹2,00,000 at 8% for 3 years: 2,00,000 × 8 × 3 ÷ 100 = ₹48,000. The amount at the end is ₹2,48,000.
Because interest is always worked out on the same ₹2 lakh, it is ₹16,000 every year, and ₹1,333 a month. That straight line is the defining feature of simple interest, and the simple interest calculator table shows it year by year.
Simple interest calculator monthly: interest per month
To get interest for one month, divide the yearly interest by 12, or use P × R ÷ 1,200. For time in months, use T = months ÷ 12.
| Principal | Rate | Time | Interest | Per month |
|---|---|---|---|---|
| ₹50,000 | 12% | 18 months | ₹9,000 | ₹500 |
| ₹2,00,000 | 8% | 3 years | ₹48,000 | ₹1,333 |
| ₹1,00,000 | 9% | 2 years | ₹18,000 | ₹750 |
Finding rate, time or principal
Rearrange the same formula when you know three of the four values:
- Rate: R = SI × 100 ÷ (P × T). ₹9,000 interest on ₹50,000 over 1.5 years is 12%.
- Time: T = SI × 100 ÷ (P × R). ₹48,000 on ₹2 lakh at 8% takes 3 years.
- Principal: P = SI × 100 ÷ (R × T).
For the rate when both start and end amounts are known, the interest rate calculator gives the simple and compound answers together.
Simple interest vs compound interest
Compound interest adds each period's interest to the balance, so later interest is charged on interest too. For a depositor that is better; for a borrower, simple interest is cheaper. Over 3 years at 8% on ₹2 lakh, simple interest is ₹48,000 while yearly compounding gives ₹51,942. The difference widens with time and rate. See the compound interest calculator for the other side.
Where simple interest is used in India
- Loans among relatives or from local lenders, priced as rupees per ₹100 per month.
- Cooperative and employer loans that charge plain interest on the shrinking balance. Their repayment plan can be checked on the simple interest EMI page, which spreads principal first and interest after.
- Interest on delayed payments under some laws, such as GST interest. See the GST interest calculator.
- Bullet repayment gold loans for short periods, where the interest and the loan are both settled in one final payment. The gold loan calculator shows that bullet amount next to the EMI option.
- Interest between two dates; the date to date calculator counts the days.
Common mistakes
- Using a monthly rate as if it were yearly. 2% a month is 24% a year.
- Typing months as years. Six months is 0.5, not 6.
- Forgetting that some lenders deduct interest in advance, which raises the real rate.
- Assuming a loan uses simple interest when the agreement says interest is compounded on default.
When in doubt, read the agreement and run both methods in the interest calculator.
Frequently asked questions
What is the simple interest formula?
SI = P × R × T ÷ 100: principal, then rate per year in percent, then years.
How do I calculate simple interest per month?
Principal times annual rate, divided by 1,200. ₹2 lakh at 8% gives ₹1,333 a month.
How do I calculate simple interest for days?
Principal × rate × days ÷ 36,500. Seventy three days on ₹1 lakh at 9% comes to ₹1,800.
Is simple interest used by banks?
Rarely for deposits, which usually compound. Some short term loans, overdue charges and staff loans use simple interest.
What is ₹50,000 at 12% simple interest for 18 months?
₹9,000 of interest, ₹500 a month, for a total of ₹59,000.
Which is better, simple or compound interest?
For a borrower, simple interest costs less. For a saver, compound interest earns more.