Simple Interest Calculator

Total Interest
₹ 30,000

Principal Amount
 ₹ 100,000

Principal Amount

₹ 1000
₹ 1 Cr

Rate of Interest(p.a)

1 %
50 %

Time Period

1 Yrs
50 Yrs

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Simple Interest Calculator

Simple interest is a basic calculation used in many lending situations. Calculating simple interest accurately can help you make better financial decisions when taking or issuing loans. In this guide, we'll cover everything you need to know about simple interest loans and how to calculate simple interest with example

What is Simple Interest?

Simple interest is a straightforward method of calculating the interest charged on a loan. It applies a fixed interest rate to the principal amount for the entire loan term.

Simple interest is determined by multiplying the loan principal by the interest rate and the length of the loan term. The formula is

Interest = Principal x Rate x Time


  • The principal is the amount borrowed or deposited.
  • Rate is the interest rate per period as a decimal.
  • Time is the number of periods.

The main advantage of simple interest loans is that the interest charge remains constant over the full term of the loan. This makes it easy to calculate the total interest costs upfront.

What is a Simple Interest Calculator?

A simple interest EMI calculator is an online tool or mobile app that lets you quickly determine interest charges on loans using the simple interest method.

These calculators allow you to input the principal amount, interest rate, and loan term. It then automatically calculates and displays the total interest owed. Many also calculate the total repayment amount (principal + interest).

Simple interest calculators provide a quick and convenient way to estimate interest and loan costs. They can be easily found online with just a simple search. Many financial websites and banks also offer their own simple interest EMI calculator tools.

Additionally, some will allow you to amend the inputs to see how changing the loan amount, interest rate or term impacts your total interest costs. This makes them valuable tools for comparing loan scenarios.

How Does Simple Interest Calculators Work?

Simple interest calculators use the simple interest formula explained below:

Interest = Principal x Rate x Time

The calculator takes the inputs entered - principal amount, interest rate, and loan term - and plugs them into the formula to determine the interest charge.

Here is a breakdown of how it calculates:

  • Take the loan principal amount entered.
  • Multiply this by the interest rate entered as a decimal. Most calculators require you to enter the rate as a percentage, which it then converts to a decimal.
  • Multiply the result by the loan term entered in years. This gives the annual interest amount.
  • Some calculators multiply the annual interest by the number of compounds per year defined by the user. This adjusts the interest for compounding frequency.

The final result displayed is the total interest payable over the full loan term based on the inputs. Advanced simple interest calculators may also calculate the total repayment amount (principal + interest) and other loan specifics. But the general working remains the same - determining interest by applying principal, rate and time to the simple interest formula.

How to Use the IIFL Simple Interest Calculator?

IIFL provides a user-friendly simple interest loan calculator on its website that can be used to calculate interest for various lending needs.

Here are the steps to use it:

  • Step 1: Visit the IIFL Simple Interest Loan Calculator page.
  • Step 2: Enter the principal loan amount in the first field (e.g. Rs.10,000).
  • Step 3: Enter the expected interest rate as a percentage (e.g. 7.5%).
  • Step 4: Select the loan term in months using the drop-down box (e.g. 36 months).
  • Step 5: Choose whether returns are compounded monthly, quarterly, half-yearly or annually.
  • Step 6: Click the 'Calculate' button.

The total interest and repayment amount will be displayed. You can tweak the inputs and click calculate again to view different scenarios. This allows easy comparison of interest costs. The calculator also displays detailed amortization schedules showing the breakup of principal/interest for each repayment period.

You can use the IIFL simple interest rate calculator for personal lending needs, business/commercial loans gold loans, two-wheeler loans and more. To get a quick estimate without having to do complex math, you can calculate simple interest online using online calculators.

How To Calculate Simple Interest?

If you need to calculate simple interest manually, follow these steps:

1. Identify the principal loan amount. This is the amount borrowed or deposited.

2. Identify the annual interest rate as a percentage.

Calculate the interest rate per period:

  • For annual interest, rate per period is the same as the annual rate.
  • For other compounding periods, divide the annual rate by the number of periods.
  • E.g. for 2% annual rate compounded monthly: 2%/12 = 0.167% per month.
  • Determine the length of the loan term in periods.
  • E.g. 5 years with annual compounding is 5 periods.
  • 3 years with monthly compounding is 3 * 12 = 36 periods.
  • Apply the formula: Interest = Principal x (Rate/period) x Total periods

Let's understand this with an example:
Here is an explanation of how to calculate simple interest using an example:
Calculating simple interest is quite straightforward using the simple interest formula:
Simple Interest = Principal x Interest Rate x Time
Let's understand this with an example:
Suppose you take a loan of Rs. 50,000 for 3 years at an annual interest rate of 8%.
To calculate the total simple interest amount payable, we just need to plug the values into the formula:
Principal = Rs. 50,000
Interest Rate (Annual) = 8%
Time Period = 3 years
Simple Interest = Principal x Interest Rate x Time
= 50,000 x 0.08 x 3
= 50,000 x (8/100) x 3
= Rs. 12,000

So if you borrowed Rs. 50,000 at 8% annual interest for 3 years, the total simple interest totes Rs. 12,000. This means that over the full 3 year period, you will pay back:

Principal amount = Rs. 50,000
+ Total simple interest = Rs. 12,000
Total repayment = Rs. 62,000

Uses of Simple Interest Calculator

Simple interest calculators have many useful applications:

  • Estimate costs for personal loans, credit cards, mortgages, auto loans, etc.
  • Calculate interest for business loans, commercial papers, etc.
  • Determine interest on fixed deposits and savings accounts.
  • Understand loan amortization schedules.
  • Model different scenarios by changing inputs.
  • Forecast interest costs for new loans.
  • Calculate returns on investments and savings.
  • Estimate interest penalty on late credit card payments.
  • Set prices/interest rates on products involving simple interest.

Overall, simple interest calculators allow lenders and borrowers to estimate loan interest charges for better financial decisions.

Benefits of Using a Simple Interest Calculator

Some key benefits of using simple interest rate calculator:

  • Saves time - Instantly calculate interest instead of manual formulas.
  • Convenience - Easily available online for any device.
  • Accuracy - Gives precise interest amounts without human error.
  • Scenario modelling - Allows comparison of different loan options.
  • Improves understanding - Shows how principal, rate and time affect interest.
  • Aid planning - Estimate interest costs for making financial plans.
  • Transparency - Borrowers can independently verify interest charges.
  • Flexibility - Allows calculation for any loan amount, tenure and interest rate.
  • Free to use - Most simple interest calculators are available at zero cost.

Using a calculator makes applying the simple interest formula quick, easy and mistake-proof.

Application of Simple Interest

Simple interest is commonly used in various short-term lending situations:

  • Estimate costs for Payday loans - Quick unsecured loans for a month.
  • Pawn loans - Interest on loans against collateral like gold/jewellery.
  • Personal loans - Consumer loans for vacations, medical emergencies, etc.
  • Title loans - Loans against vehicles where ownership documents are kept as collateral.
  • Tax refund loans - Short-term loans against expected tax refunds from the IRS.
  • Microloans - Small business loans and seed funding options.
  • Credit Cards - Interest charges on outstanding balances.
  • Purchase financing - Zero interest instalments for retail purchases.
  • Fixed deposits - Interest payment on FD deposits.
  • Business loans - Short-term working capital and cash flow financing.

Simple interest is preferred for short-duration loans as the interest amount does not compound over time. This helps keep overall interest costs low compared to compound interest loans. Moreover, you can calculate simple interest online using digital tools.


Q1. What is the difference between simple and compound interest?

Simple interest charges only on the principal amount. Compound interest charges interest on the principal AND previously accumulated interest.

Q2. Can you calculate compound interest in a simple interest calculator?

No, you need a specialized compound interest calculator for that. Simple interest loan EMI calculator can only calculate simple interest.

Q3. How is annual percentage rate (APR) different from simple interest?

APR factors in all costs like origination fees. Simple interest only considers principal, interest rate and period.

Q4. Are there simple interest calculator apps?

Yes, many financial apps and loan apps have built-in simple interest loan EMI calculator. Popular options include Bankrate, Cashboard, Simpl and ZestMoney.

Q5. Can I edit interest rates and loan period in a calculator?

Yes, most calculators allow editing inputs to model different scenarios for decision making.

Q6. Is simple interest and compound interest taxed differently?

No, both are taxed the same way as interest income for lenders and interest expense for borrowers.