Contents
Simple Interest Calculator
Easily calculate the interest and final amount using this no-fuss Simple Interest Calculator. Whether you’re borrowing or saving, this tool helps you compute results based on the time-tested simple interest formula.
Use the tabs provided to calculate different variables in the formula. Keep in mind, in most real-world situations, compound interest is the norm. For that, check out the Compound Interest Calculator.
Input Fields
- Principal Amount
- Interest Rate
- Per year
- Per month
- Term
- In years
- In months
Your Result
- End Balance: ₹26,000.00
- Total Interest Earned: ₹6,000.00
How It’s Calculated
Simple Interest: ₹20,000 × 3% × 10 = ₹6,000.00
End Balance: ₹20,000 + ₹6,000 = ₹26,000.00
Balance Over Time – Visual Snapshot
Your money grows steadily over 10 years:
0 yr → ₹0
1 yr → ₹20,600
2 yr → ₹21,200
…
10 yr → ₹26,000
This graph helps you visualize accumulation at a glance.
Breakdown of Final Amount
- 77%: Principal
- 23%: Interest
Year-by-Year Interest Schedule
Year 1: ₹600.00 interest → ₹20,600.00 total
Year 2: ₹600.00 interest → ₹21,200.00 total
Year 3: ₹600.00 interest → ₹21,800.00 total
Year 4: ₹600.00 interest → ₹22,400.00 total
Year 5: ₹600.00 interest → ₹23,000.00 total
Year 6: ₹600.00 interest → ₹23,600.00 total
Year 7: ₹600.00 interest → ₹24,200.00 total
Year 8: ₹600.00 interest → ₹24,800.00 total
Year 9: ₹600.00 interest → ₹25,400.00 total
Year 10: ₹600.00 interest → ₹26,000.00 total
Other Calculators Worth Exploring
- Compound Interest Calculator
What Is Simple Interest?
Simple interest is the cost you pay to borrow funds or the gain you earn from lending money. You might pay it on car loans or credit cards—or receive it on savings accounts or fixed deposits.
The key? Simple interest is calculated only on the original principal. It doesn’t grow on itself. The rate stays consistent over time, and no matter how frequently it’s applied, it always sticks to the original amount.
The Formula: Simple Interest
Simple Interest = Principal × Rate × Time
Or in symbols: I = P × r × t
Where:
- I = Interest
- P = Principal (initial amount)
- r = Annual interest rate (decimal)
- t = Time in years
To adjust for shorter terms, you can use fractions. For example, 6 months would mean t = 0.5.
Interest at Different Intervals
You may also see the formula written as:
I = P × r × n
Here,
- r = Interest per period (e.g., per month)
- n = Number of periods
This version helps calculate interest monthly, daily, or at any custom frequency.
Example 1: I = P × r × t
You borrow ₹10,000 at a 5% annual rate for 5 years.
- ₹10,000 × 0.05 = ₹500/year
- ₹500 × 5 = ₹2,500 total interest
- Final repayment = ₹10,000 + ₹2,500 = ₹12,500
Example 2: I = P × r × n
With a 5% monthly interest rate over 12 months:
- ₹10,000 × 0.05 = ₹500/month
- ₹500 × 12 = ₹6,000 total interest
- Final repayment = ₹10,000 + ₹6,000 = ₹16,000
Where Is Simple Interest Used?
Simple interest benefits borrowers—it keeps costs lower since it doesn’t build on itself. You’ll see it used in:
- Payday loans
- Short-term personal loans
- Some bonds or dividend-paying investments
As a lender or investor, it’s not ideal unless reinvestment is part of the plan. Otherwise, your growth remains linear, not exponential.
Simple vs Compound Interest
Compound interest is a more dynamic force. It adds interest not just to your principal but to prior interest as well. Over time, this snowball effect magnifies results.
Compound Interest Formula:
A = P × (1 + r/n) ^ (nt)
Where:
- A = Final amount
- P = Initial principal
- r = Interest rate (decimal)
- n = Number of times interest is compounded per year
- t = Time in years
The more often it compounds—monthly, daily—the faster the total grows.
Let’s Compare
Borrow ₹10,000 at 5% for 5 years:
- Simple interest total: ₹12,500
- Compound interest (monthly): ₹12,833.59
That’s ₹333.59 more over the same term—small at first, but it adds up fast in the long run.