Simple Interest — Free Online Calculator
Basic interest. Free simple interest with instant results.
Last updated: 2026-06-01
Investment Details
1.00 Lakh
Investment Summary
Total Amount at Maturity
₹1,35,000
Principal + Interest after 5 years
Principal
₹1,00,000
Your investment
Total Interest
₹35,000
Over 5 years
Monthly Interest
₹583
Yearly Interest
₹7,000
Note: With compound interest, you could earn ₹5,255 more!
Interest Growth (Linear)
| Year | Principal | Interest This Year | Cumulative Interest | Total Value |
|---|---|---|---|---|
| Year 1 | ₹1,00,000 | ₹7,000 | ₹7,000 | ₹1,07,000 |
| Year 2 | ₹1,00,000 | ₹7,000 | ₹14,000 | ₹1,14,000 |
| Year 3 | ₹1,00,000 | ₹7,000 | ₹21,000 | ₹1,21,000 |
| Year 4 | ₹1,00,000 | ₹7,000 | ₹28,000 | ₹1,28,000 |
| Year 5 | ₹1,00,000 | ₹7,000 | ₹35,000 | ₹1,35,000 |
Key Insight: Notice how the interest earned each year (₹7,000) remains constant. This is the defining characteristic of simple interest — it's calculated only on the original principal, not on accumulated interest.
Understanding Simple Interest
Simple interest is calculated only on the original principal amount, making it straightforward and predictable. Unlike compound interest, the interest doesn't earn additional interest over time.
Linear Growth Pattern
At 7% simple interest, you earn exactly ₹7,000 every year, regardless of accumulated interest. After 5 years: ₹35,000 total interest.
Key Characteristics
- Interest is constant each period
- Easy to calculate and understand
- Total = Principal × (1 + Rate × Time/100)
- Less beneficial for long-term investments
Common Applications
Short-term Loans
Personal loans, payday loans, and some car financing use simple interest
Treasury Bills
Government T-bills and some bonds calculate returns using simple interest
Add-on Interest Loans
Some consumer loans calculate total interest upfront using simple interest
Important: For long-term savings and investments, always prefer options that offer compound interest for better wealth accumulation.
Want Better Returns?
Simple interest is good to understand, but compound interest helps your money grow faster. Try our Compound Interest Calculator!
Data sources
Rates and thresholds on this page are based on official publications. Verify against the source for your specific circumstances.
- Consumer Financial Protection Bureau (CFPB) — verified 2026-06-01 · Standard amortisation / EMI formula (Truth in Lending Act)
Educational estimates. Verify loan terms with your lender — many products use amortised compound interest.