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Flat-rate interest — no compounding. Quick math for short loans and basic deposits.
Total amount
₹1.40 L
You'll earn ₹40,000 as simple interest over 5 years.
₹1.00 L
₹40,000
| Year | Interest this year | Cumulative interest | Balance |
|---|---|---|---|
| 1 | ₹8,000 | ₹8,000 | ₹1.08 L |
| 2 | ₹8,000 | ₹16,000 | ₹1.16 L |
| 3 | ₹8,000 | ₹24,000 | ₹1.24 L |
| 4 | ₹8,000 | ₹32,000 | ₹1.32 L |
| 5 | ₹8,000 | ₹40,000 | ₹1.40 L |
Simple Interest (SI) is interest calculated only on the original principal — it does not compound on accumulated interest. It's the simplest interest model, used in short-term loans, some auto-loans, fixed deposits with periodic payouts, and many government certificates.
For longer durations, simple interest understates the real growth of money — that's where compound interest takes over and produces dramatically larger returns.
SI = (P × r × t) / 100
Total Amount = P + SI
P = principal
r = annual interest rate (percent)
t = time in years
On ₹1,00,000 at 8% for 10 years: simple interest gives ₹80,000, while compound interest (yearly) gives roughly ₹1,15,892. The longer the tenure and the higher the rate, the bigger the gap. For long-term investing always think in compound terms.
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