Simple interest formula (P × R × T ÷ 100) with examples

The simple interest formula is SI = P × R × T ÷ 100. Interest is charged only on the original amount, never on interest already earned. It is the method behind many short personal loans, some deposits that pay out interest, and interest on overdue bills.

The formula

Simple interest = P × R × T ÷ 100
Total = P + simple interest

P is the principal, R the yearly rate in percent, and T the time in years. Months are T = months ÷ 12. Days are T = days ÷ 365.

Worked example: 2 years 3 months

1. P = ₹50,000, R = 12, T = 2 + 3/12 = 2.25 years
2. SI = 50,000 × 12 × 2.25 ÷ 100 = ₹13,500
3. Total to repay = ₹63,500

Finding the rate or the time

• Rate R = SI × 100 ÷ (P × T)
• Time T = SI × 100 ÷ (P × R)
• Principal P = SI × 100 ÷ (R × T)

Example: ₹13,500 interest on ₹50,000 over 2.25 years means R = 13,500 × 100 ÷ (50,000 × 2.25) = 12%.

365 days or 360 days?

The simple interest calculator counts days as a fraction of a 365-day year. Some lenders use 360 days, which gives slightly more interest for the same number of days. Check your agreement. To count the days between two dates, use the date calculator.

Simple vs compound interest

Compound interest adds interest to the balance, so the next period’s interest is larger. Over short periods the gap is small; over many years it is large. See the compound interest formula. Home and car loans use a reducing balance and an EMI instead; see how EMI works.

How to use the calculator

1. Enter the principal and the yearly rate.
2. Enter the time in years, months and days.
3. Read the interest and the total, and compare with compound interest below the result.