Simple Interest Calculator
Flat-rate interest calculation for loans, KVP-style instruments, or quick mental math. SI grows linearly — unlike compound interest.
🇮🇳All amounts in ₹ INR · India tax law · FY 2025–26
Inputs
Principal
₹1,00,000
Simple interest
₹40,000
Total amount
₹1,40,000
What is Simple Interest?
Simple interest is calculated only on the original principal. The interest amount each year is identical and does not earn further interest, unlike compound interest. Many short-term consumer loans, car loans (on a flat-rate basis), and some traditional saving instruments use simple interest.
SI = (P × R × T) / 100When SI applies in India
- Most personal car loans (flat-rate variant)
- Short-term gold loans and pawnshop loans
- KVP, NSC and similar government instruments (quote SI for comparison)
- Friendly loans between family members
Why compound interest beats simple
₹1 lakh at 8% for 20 years: simple interest gives ₹1.6 lakh interest. Compound interest (yearly) gives ₹3.66 lakh. The gap widens with time — always check which method your loan or deposit uses.
A 12% flat rate on a 5-year loan is roughly equivalent to a 21–22% reducing-balance rate. Always ask for the reducing-balance APR before signing.
Compound. Most Indian banks compound FD interest quarterly even if interest is paid monthly.