Simple Interest Calculator
Run basic calculations used in informal loans, vendor credit, and short-term capital financing. A straight-line approach without any overlapping compound traps.
The Linear Reality
Simple Interest generates the exact same absolute amount of interest every single year. The interest paid in Year 10 is identical to the interest paid in Year 1. There is no snowball effect.
Total Interest Paid
₹80,000
Over 10 years on 8% Rate
Total Repayment
₹1,80,000
Principal + Interest
Principal Amount
₹1,00,000
Original loan block
Cost of Borrowing
80%
Absolute cost %
Linear Wealth Trajectory
Notice the chart line is perfectly straight. Contrast this against the exponential curve of Compound Interest.
Timeline Table
| Year | Total Balance | Yearly Flat Interest |
|---|---|---|
| Year 1 | ₹1,08,000 | +₹8,000 |
| Year 2 | ₹1,16,000 | +₹8,000 |
| Year 3 | ₹1,24,000 | +₹8,000 |
| Year 4 | ₹1,32,000 | +₹8,000 |
| Year 5 | ₹1,40,000 | +₹8,000 |
| Year 6 | ₹1,48,000 | +₹8,000 |
| Year 7 | ₹1,56,000 | +₹8,000 |
| Year 8 | ₹1,64,000 | +₹8,000 |
| Year 9 | ₹1,72,000 | +₹8,000 |
| Year 10 | ₹1,80,000 | +₹8,000 |
How is this calculated?
Simple Interest is calculated exclusively on the original principal. The interest does not earn its own interest.
Related Calculators
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Book Free ConsultationUnderstanding Simple Interest
The foundation of finance. While less lethal than compounding, understanding Simple Interest is crucial to detecting predatory 'flat rate' loans and structuring informal credit.
Simple vs Compound: The Mathematical Divide
Why the banks won't give you simple interest loans
SCSS & Government Bonds
The Senior Citizen Savings Scheme (SCSS) and major RBI Floating Rate Bonds operate practically on Simple Interest, dispensing out fixed non-compounding cash flows every quarter.
The Flat Rate Trap
Beware of personal loans quoting a 'Flat Interest Rate'. An 8% flat rate usually translates to an incredibly destructive ~15% Effective Annualized Compounding Rate under the hood.