Simple Interest Calculator
Calculate simple interest and total maturity amount from principal, annual rate, and time period in years.
Principal Amount
₹
Annual Interest Rate (%)
%
Time Period (Years)
Yr
Total Amount
₹ 1,40,000
Principal
₹ 1,00,000
Interest Earned
₹ 40,000
What is simple interest?
Simple interest is calculated only on the original principal amount, for the entire duration of the loan or investment — unlike compound interest, it never earns "interest on interest" along the way. It's commonly used for short-term loans, certain fixed deposits, and some auto loans.
Formula
Total Amount (A) = P + I = P × (1 + R×T/100)
Where P is the principal, R is the annual interest rate (%), and T is the time period in years.
Example
A principal of ₹1,00,000 at 8% annual simple interest for 5 years earns ₹40,000 in interest, for a total maturity amount of ₹1,40,000 — the interest amount stays the same every year, since it's always calculated on the original ₹1,00,000.
Common Use Cases
- Calculating interest on short-term personal loans that don't compound.
- Working out returns on simple-interest fixed deposits or bonds.
- Quickly estimating interest without needing a compounding frequency.
FAQs
What's the difference between simple and compound interest?
Simple interest is always calculated on the original principal only, so it grows linearly year over year. Compound interest is recalculated on the principal plus previously earned interest, so it grows faster over time. For compounding investments, use the Compound Interest Calculator instead.
Does the interest amount change every year with simple interest?
No — because simple interest is always calculated on the same original principal, the interest earned (or owed) each year is identical, unlike compound interest where it increases annually.
Where is simple interest actually used?
It's common in short-term loans, certain government bonds, some auto and consumer loans, and a few types of fixed deposits — anywhere a lender wants a simpler, more predictable interest structure than compounding.