Simple interest is charged only on the original principal — unlike compound interest, earned interest never starts earning its own interest. It's still used for short-term loans, some deposits and quick estimates. Enter the principal, annual rate and time period to get the interest and the total amount.
Interest
₹40,000
Estimates only. Actual interest depends on the lender's terms and day-count conventions. Not financial advice.
Simple interest is linear — the same interest accrues every period:
SI = P × R × T ÷ 100
Total amount = P + SI. Because interest never compounds, simple interest always produces a smaller total than compound interest at the same rate and tenure.
Borrow ₹1,00,000 at 8% per annum simple interest for 5 years:
At compound interest (yearly) the same loan would cost ₹1,46,933 — the ₹6,933 difference is the interest-on-interest.
Interest is the cost of borrowing (or the earnings on a deposit) under simple interest. Total amount is what is repaid or received at the end.
If you're borrowing, compare this against the compound-interest equivalent — lenders quoting "simple" or "flat" rates can look cheaper than they are. If you're saving, prefer products that compound.
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Content last reviewed on 2026-10-06.