Work out simple interest with the P x R x T / 100 formula. Enter the amount, the rate, and the period in years, months, or days to get the interest and the total.
When is simple interest actually used?
Gold loans, many short-term personal loans, most vehicle loan penalty clauses, and almost all informal lending between people. Bank deposits and home loans use compound interest instead.
How much worse is compound interest for a borrower?
Over 5 years at 10%, ₹1,00,000 costs ₹50,000 in simple interest but ₹61,051 compounded yearly. The gap widens fast with time. Over 20 years, simple interest costs ₹2,00,000 and yearly compounding costs ₹5,72,750.
How do I count a tenure in days?
This calculator divides by 365. Some lenders use 360 days, which raises the interest slightly. Check your loan document if the exact paisa matters.
Can I use this for a fixed deposit?
Only for a non-cumulative FD that pays interest out and never adds it back. For a normal cumulative FD, use the FD calculator, which compounds quarterly.
How do I find the rate if I know the interest?
Rearrange the formula: R = SI x 100 / (P x T). If ₹40,000 of interest built up on ₹1,00,000 over 5 years, the rate is 40,000 x 100 / (1,00,000 x 5) = 8%.
Does a partial repayment change the maths?
Yes. Simple interest assumes the principal stays untouched for the whole period. If you repay part of it, calculate interest on each balance for the days it was outstanding, then add the pieces.