How to use the simple interest calculator
- Enter the principal, the amount lent or borrowed.
- Choose whether the rate is per year or per month, then enter it. ₹2 per hundred per month is 2% a month.
- Choose years, months or days and enter the time period.
- Read the interest, the total amount and the interest per month and per day.
- Compare with the compound interest table below to see what adding interest to the balance would change.
The simple interest formula
SI = P × R × T ÷ 100 · Amount = P + SI
P is the principal, R the rate in % a year and T the time in years. For months, T is months ÷ 12; for days, days ÷ 365. With a monthly rate, use R in % a month and T in months: the answer is the same.
Worked example. ₹50,000 lent at 12% a year for 3 years: SI = ₹50,000 × 12 × 3 ÷ 100 = ₹18,000. The borrower repays ₹68,000. Interest is ₹6,000 every year, ₹500 a month and about ₹16 a day. As a monthly rate, 12% a year is 1% a month: ₹50,000 × 1 × 36 ÷ 100 gives the same ₹18,000.
Simple interest on ₹1,00,000 by rate and time
Interest only; add ₹1,00,000 for the total amount. Simple interest grows by the same amount every year.
| Rate a year | 1 year | 2 years | 3 years | 5 years | 10 years |
|---|---|---|---|---|---|
| 6% | ₹6,000 | ₹12,000 | ₹18,000 | ₹30,000 | ₹60,000 |
| 8% | ₹8,000 | ₹16,000 | ₹24,000 | ₹40,000 | ₹80,000 |
| 10% | ₹10,000 | ₹20,000 | ₹30,000 | ₹50,000 | ₹1,00,000 |
| 12% | ₹12,000 | ₹24,000 | ₹36,000 | ₹60,000 | ₹1,20,000 |
| 15% | ₹15,000 | ₹30,000 | ₹45,000 | ₹75,000 | ₹1,50,000 |
| 18% | ₹18,000 | ₹36,000 | ₹54,000 | ₹90,000 | ₹1,80,000 |
| 24% | ₹24,000 | ₹48,000 | ₹72,000 | ₹1,20,000 | ₹2,40,000 |
Rupees per hundred: monthly rates as yearly rates
Informal loans are often quoted as rupees per ₹100 per month. Multiply by 12 for the yearly simple interest rate. If interest is not paid each month and is added to the loan, the cost is higher, shown in the last column.
| Per ₹100 a month | Monthly rate | Yearly rate (simple) | Monthly interest on ₹1,00,000 | Interest for a year | Yearly rate if compounded monthly |
|---|---|---|---|---|---|
| ₹0.5 | 0.5% | 6% | ₹500 | ₹6,000 | 6.17% |
| ₹1 | 1% | 12% | ₹1,000 | ₹12,000 | 12.68% |
| ₹1.25 | 1.25% | 15% | ₹1,250 | ₹15,000 | 16.08% |
| ₹1.5 | 1.5% | 18% | ₹1,500 | ₹18,000 | 19.56% |
| ₹2 | 2% | 24% | ₹2,000 | ₹24,000 | 26.82% |
| ₹2.5 | 2.5% | 30% | ₹2,500 | ₹30,000 | 34.49% |
| ₹3 | 3% | 36% | ₹3,000 | ₹36,000 | 42.58% |
| ₹5 | 5% | 60% | ₹5,000 | ₹60,000 | 79.59% |
Simple vs compound interest on ₹1,00,000 at 10%
The two are close for a year or two. Over longer periods compound interest pulls ahead, because interest earns interest. Work out compound interest for any amount on the compound interest calculator.
| Period | Simple interest | Compounded yearly | Compounded monthly | Monthly vs simple |
|---|---|---|---|---|
| 1 year | ₹10,000 | ₹10,000 | ₹10,471 | ₹471 |
| 2 years | ₹20,000 | ₹21,000 | ₹22,039 | ₹2,039 |
| 3 years | ₹30,000 | ₹33,100 | ₹34,818 | ₹4,818 |
| 5 years | ₹50,000 | ₹61,051 | ₹64,531 | ₹14,531 |
| 10 years | ₹1,00,000 | ₹1,59,374 | ₹1,70,704 | ₹70,704 |
| 20 years | ₹2,00,000 | ₹5,72,750 | ₹6,32,807 | ₹4,32,807 |
Loans quoted at a flat rate charge simple interest on the full amount for the whole term, even as you repay. See what that means as a reducing rate on the flat vs reducing rate calculator.
Frequently asked questions
What is the formula for simple interest?
SI = P × R × T ÷ 100, where P is the principal, R the rate in % a year and T the time in years. The total amount is P + SI. For ₹50,000 at 12% for 3 years, SI = ₹50,000 × 12 × 3 ÷ 100 = ₹18,000, and the total is ₹68,000.
How do I calculate simple interest per month?
Work out one year's interest and divide by 12, or use a monthly rate with T in months. ₹50,000 at 12% a year earns ₹500 a month.
What does ₹2 per hundred interest mean?
It means ₹2 interest on every ₹100 for each month, which is 2% a month or 24% a year as simple interest. On ₹1,00,000 that is ₹2,000 a month and ₹24,000 a year. If unpaid interest is added to the loan each month, the yearly cost rises to about 26.8%.
How is simple interest calculated for days?
Use T = days ÷ 365. ₹1,00,000 at 10% for 90 days earns ₹1,00,000 × 10 × 90 ÷ 365 ÷ 100 = ₹2,466, or ₹27 a day. Some lenders use a 360-day year, which gives slightly more.
What is the difference between simple and compound interest?
Simple interest is worked out only on the principal. Compound interest is also worked out on interest already added. ₹50,000 at 12% for 3 years earns ₹18,000 as simple interest and ₹20,246 compounded yearly.
Where is simple interest used?
In informal loans between people, in loans quoted at a flat rate, and in deposits that pay interest out instead of adding it, such as the Post Office Monthly Income Scheme. Bank savings accounts, FDs and most loans use compound interest or a reducing balance.