Loan / Deposit Details
₹
₹1K₹50L
%
0.5%36%
yr
0.5 yr40 yr
Maturity Amount
₹0
principal + simple interest
Principal
₹0
Simple Interest
₹0
Simple vs Compound Interest
Simple interest₹0
Compound interest (annual)₹0
Extra from compounding
₹0
Simple Interest Formula
SI = (P × R × T) ÷ 100
Where P = principal, R = annual rate (%), and T = time in years. The maturity amount is A = P + SI.
Interest is charged only on the original principal, so the yearly interest never changes.
Example
For a principal of ₹1,00,000 at 8% for 5 years:
- Simple Interest₹40,000
- Maturity Amount₹1,40,000
- Interest per year₹8,000
Frequently Asked Questions
Common questions about simple interest
What is the formula for simple interest?
SI = (P × R × T) ÷ 100, where P is principal, R is annual rate in percent, and T is time in years. Maturity amount = P + SI.
Simple vs compound interest — what's the difference?
Simple interest is charged only on the principal, so it stays flat each year. Compound interest is charged on principal plus accrued interest, so it grows faster. See our Compound Interest Calculator.
Where is simple interest used?
It is used for short-term loans, car loans, some personal loans, and certain bonds or deposits where interest isn't reinvested. Many informal loans also use simple interest.
How do I calculate simple interest for months?
Convert months to years by dividing by 12. For example, 6 months = 0.5 years. Then apply SI = (P × R × T) ÷ 100 with the fractional time.
Is simple interest better for borrowers?
Yes — borrowers pay less under simple interest since interest applies only to the original principal. Savers and investors prefer compound interest, which grows money faster.
Can the time period be in fractions of a year?
Yes. The formula works with any positive time value — enter 2.5 for two and a half years, or 0.75 for nine months.