Simple Interest Calculator
Simple interest is interest calculated only on the original principal. It does not build on itself, which makes it easy to predict: the same amount of interest is earned or charged each year.
Results
Interest
₹35,000.00
- Total amount
- ₹1,35,000.00
- Principal + interest
- Principal
- ₹1,00,000
Simple interest on ₹1,00,000 at 7% for 5 years is ₹35,000.00, giving a total of ₹1,35,000.00.
Principal vs interest
- Principal₹1,00,000 (74.1%)
- Interest earned₹35,000 (25.9%)
Interest by year (5 rows)
| Period | Interest so far | Total amount |
|---|---|---|
| Year 1 | ₹7,000.00 | ₹1,07,000.00 |
| Year 2 | ₹14,000.00 | ₹1,14,000.00 |
| Year 3 | ₹21,000.00 | ₹1,21,000.00 |
| Year 4 | ₹28,000.00 | ₹1,28,000.00 |
| Year 5 | ₹35,000.00 | ₹1,35,000.00 |
Show the calculation steps
- Convert the time period to years: 5 years = 5 years.
- Interest = P × R × T ÷ 100 = ₹1,00,000 × 7 × 5 ÷ 100 = ₹35,000.00.
- Total amount = principal + interest = ₹1,00,000 + ₹35,000.00 = ₹1,35,000.00.
What is simple interest?
With simple interest, you earn (or pay) a fixed percentage of the original amount for every year the money is invested or borrowed. Interest from earlier years is not added to the principal, so it never earns interest of its own.
Simple interest is common for short-term loans, some bonds and basic deposit calculations, and it is a useful baseline when comparing against compound interest.
How the calculation works
The calculator multiplies the principal by the annual rate and by the time in years, then divides by 100 because the rate is a percentage. If you enter the period in months, it is divided by 12 first.
The table below the result shows how interest accumulates year by year, growing by the same amount each year.
Simple vs compound interest
Over one year the two are identical. Over longer periods compound interest grows faster because interest is added to the balance and then earns interest itself. Use the compound interest calculator to see the difference for the same inputs.
Formula
Simple interest = P × R × T ÷ 100
Total amount = P + Simple interest
Where:
- P
- = Principal, the original amount
- R
- = Annual interest rate in percent
- T
- = Time in years (months ÷ 12)
Example calculation
₹1,00,000 at 7% for 5 years
Inputs
- Principal Amount
- ₹1,00,000
- Interest Rate
- 7 %
- Time Period
- 5 years
Result
- Interest
- ₹35,000.00
- Total amount
- ₹1,35,000.00
- Principal
- ₹1,00,000
Step-by-step
- Convert the time period to years: 5 years = 5 years.
- Interest = P × R × T ÷ 100 = ₹1,00,000 × 7 × 5 ÷ 100 = ₹35,000.00.
- Total amount = principal + interest = ₹1,00,000 + ₹35,000.00 = ₹1,35,000.00.
Important notes
- Simple interest assumes the rate stays fixed for the whole period and that no interest is added back to the principal.
- Taxes on interest income are not included.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
What is the formula for simple interest?
Simple interest = P × R × T ÷ 100, where P is the principal, R is the annual rate in percent and T is the time in years. The total amount is the principal plus this interest.
How do I calculate simple interest for months?
Convert the months to years by dividing by 12, or just choose Months in the time period selector and the calculator does it for you. For example, 18 months is 1.5 years.
Is simple interest the same every year?
Yes. Because it is only calculated on the original principal, the interest earned in each year is the same, so total interest grows in a straight line.
Which is better for savings, simple or compound interest?
For a saver, compound interest earns more over the same period because interest is added to the balance. For a borrower, simple interest costs less than compound interest at the same rate.
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