Calculate simple interest and total amount for any principal, rate and time.
Simple interest formula
SI = P × R × T ÷ 100Interest is charged only on the original principal, so it is the same every year. Total amount = P + SI.
Example
₹50,000 at 12% for 2 years: SI = 50,000 × 12 × 2 ÷ 100 = ₹12,000; total ₹62,000. For 6 months, T = 0.5 → ₹3,000.
Where simple interest is used
- Gold loans and many short-term loans quote monthly simple interest (e.g. 1% per month = 12% a year).
- Informal lending ("₹2 per hundred per month" = 24% a year).
- Exam questions in SSC, banking and school maths.
For bank deposits and most investments use the compound interest calculator.
How to use the simple interest calculator
- Enter the principal — the amount borrowed or lent.
- Enter the yearly rate. For a monthly rate (common in informal lending, e.g. '2% per month') multiply by 12 first: 2% a month = 24% a year.
- Enter the time in years, months or days.
- Read the interest and the total amount (principal + interest).
Step-by-step: ₹2,00,000 at 9% for 3 years
SI = P × R × T ÷ 100- Multiply principal by rate: 2,00,000 × 9 = 18,00,000.
- Multiply by time: 18,00,000 × 3 = 54,00,000.
- Divide by 100: interest = ₹54,000.
- Total to repay: 2,00,000 + 54,000 = ₹2,54,000.
For months, use T = months ÷ 12: ₹50,000 at 12% for 18 months → 50,000 × 12 × 1.5 ÷ 100 = ₹9,000. For days, use T = days ÷ 365.
Worked examples
| Situation | Working | Answer |
|---|
| Gold loan ₹1,00,000 at 10% for 6 months | 1,00,000 × 10 × 0.5 ÷ 100 | ₹5,000 interest |
| Friend lends ₹25,000 at 2% per month for 8 months | 25,000 × 24 × (8 ÷ 12) ÷ 100 | ₹4,000 interest |
| Court-ordered interest 6% on ₹3,50,000 for 400 days | 3,50,000 × 6 × (400 ÷ 365) ÷ 100 | ₹23,014 |
Simple vs compound interest
Simple interest is charged only on the original principal. Compound interest is charged on principal plus accumulated interest, so it grows faster. Chit funds, gold loans, informal loans and many education loans during the study period use simple interest; bank deposits, home loans and credit cards compound. Check the difference with the Compound Interest Calculator.
Tips and common mistakes
- If a lender quotes a rate 'per month', the yearly rate is 12 times higher — 3% a month is 36% a year.
- Interest for part of a year is proportional: 7 months is 7 ÷ 12 of a year.
- The formula gives interest only; always add the principal to get the amount repayable.
Frequently asked questions
What is the simple interest on ₹1 lakh at 10% for 1 year?
₹10,000. SI = 1,00,000 × 10 × 1 ÷ 100.
How do I convert monthly interest to yearly?
Multiply by 12. 2% per month is 24% per year simple interest.
What is the difference between simple and compound interest?
Simple interest is on the principal only; compound interest is also on the interest already earned, so it grows faster over time.