How simple interest is calculated
Simple interest is calculated only on the original principal amount. Unlike compound interest, previously earned interest is not added to the principal when calculating future interest.
Simple interest formula
The rate is expressed as an annual percentage and the time is expressed in years.
Total amount
Simple interest examples
Enter ₹1,00,000 as the principal, 8% as the annual interest rate, and 5 years as the time period. The calculator will determine the simple interest and total amount.
The simple interest depends directly on the principal, annual rate, and length of the investment or loan period.
If the interest rate is 0%, no interest is earned or charged, so the total amount remains equal to the principal.
Simple interest vs compound interest
With simple interest, interest is calculated only on the original principal. With compound interest, previously accumulated interest can also contribute to future interest calculations.
This makes simple interest calculations straightforward and useful for situations where interest does not compound.