Use this calculator to find the simple interest earned or paid on a principal amount over time.
Formula:
Simple Interest (SI) = (Principal × Rate × Time) / 100Total Amount = Principal + SIOur Simple Interest Calculator lets you compute interest on loans, savings, investments, and more in seconds. Whether you’re a student learning basic finance, a borrower checking loan repayments, or an investor estimating returns, this tool ensures fast, precise results without any manual mistakes.
Simple interest is a straightforward method of calculating the interest charged or earned on a principal amount over a set period of time. Unlike compound interest—where interest is periodically added to the principal and then earns interest itself—simple interest is calculated only on the original principal each period.
The core formula for simple interest is:
SI = P × r × t
Where:
Simple interest offers clarity and predictability. It’s ideal for short-term loans, fixed deposits, and scenarios where the lender or investor does not reinvest earned interest. Common use cases include personal loans, car loans, short-term bonds, and certificates of deposit.
For long-term investments or loans, compound interest often yields higher returns (for investors) or higher costs (for borrowers). Always compare simple vs. compound options when horizons exceed 1–2 years.
Calculating simple interest by hand reinforces financial literacy. Follow these steps:
P × r × t to get the simple interest.P + SI).Suppose you invest ₹50,000 at an annual rate of 7% for 3 years:
Simple Interest: SI = 50,000 × 0.07 × 3 = ₹10,500
Total Amount: 50,000 + 10,500 = ₹60,500
If the period is not a whole year, convert months or days to a fraction:
Loan of ₹25,000 at 9% for 9 months:
SI = 25,000 × 0.09 × 0.75 = ₹1,687.50
Total = ₹25,000 + ₹1,687.50 = ₹26,687.50
For precise calculations, divide days by 365 (or 360 for banking conventions). Always state which basis you use to avoid confusion.
In leap years use 366 days for exact accuracy when dealing with daily rates. This is generally negligible for short durations.
Simple interest appears in many everyday scenarios:
Certain educational savings instruments calculate returns using simple interest for short lock-in periods before switching to compound interest.
While most mortgages use amortized (compound interest) schedules, initial bridging loans may use simple interest until conversion.
When evaluating loan offers, ensure you compare the effective interest cost. A 10% simple-interest loan for 1 year may be cheaper than a 9% compound-interest loan compounding monthly.
Convert simple interest rates to effective annual rates for apples-to-apples comparison:
EAR = (1 + r × t)¹/ₜ – 1 (for t in years)
5% simple interest for 6 months has EAR:
EAR = (1 + 0.05 × 0.5)² – 1 = (1.025)² – 1 ≈ 0.0506 = 5.06%
Marketplace lenders may quote simple interest, so always compute EAR to see true cost.
Laws often require lenders to disclose APR (annual percentage rate), which may differ from simple interest rates.
A: Yes, but better compare with compound options, as compound interest may be more or less favorable depending on compounding frequency.
A: If payments reduce principal before maturity, calculate interest only on the outstanding amount for each period.
A: Split the calculation into segments: compute SI for each rate and sum.
A: Rarely—most savings accounts compound interest daily or monthly. Check account terms.
A: Divide by 100. E.g., 7.5% = 7.5 ÷ 100 = 0.075.
Specify whether time is in days, months, or years, and state the day-count convention (360, 365, or 366).
Use a calculator or tool to validate manual computations, especially for business-critical loans.
Integrate with banking or accounting software via APIs that return simple-interest values programmatically.
Keep principal and interest in the same currency and round only at final presentation to avoid rounding errors.
Record rate changes, compounding assumptions, and any prepayments in financial records.
Simple interest remains a fundamental concept for understanding the cost of credit and the basic mechanics of earnings on short-term investments. Our Simple Interest Calculator streamlines this process—no setup, no hidden fees, no surprises. Try it now and get clarity on all your interest calculations!