Simple Interest & Instalment Calculator

Two calculations on one page: plain simple interest, and the equal annual instalment that clears a debt borrowed at simple interest.

Simple interest

Interest · Total amount

Equal annual instalments

Each instalment

Simple interest

SI = P × R × T / 100   ·   Amount = P + SI

Interest is charged on the original principal only, never on interest already accrued. That is the entire difference from compound interest, and it is why simple interest grows in a straight line while compound interest curves upward.

The instalment formula

This is the one that trips people up. A sum P is borrowed at R% simple interest and repaid in n equal annual instalments of x. Each instalment, once paid, earns simple interest for the remaining years, so the instalments are not simply P/n plus interest.

x = P (1 + nR/100) ÷ ( n + R · n(n−1) / 200 )

The numerator is the total amount owed at the end of the term. The denominator is what n instalments of ₹1 each would grow to by that same date — the instalment paid at the end of year 1 earns interest for n−1 years, the next for n−2 years, and the last for none at all.

Worked example

₹10,000 at 5% simple interest, repaid in 2 equal annual instalments

  1. Amount owed after 2 years = 10,000 (1 + 2×5/100) = 10,000 × 1.1 = ₹11,000
  2. Denominator = 2 + 5 × 2 × 1 / 200 = 2 + 0.05 = 2.05
  3. x = 11,000 ÷ 2.05 = ₹5,365.85
  4. Check: first instalment earns 1 year of interest → 5,365.85 × 1.05 = 5,634.15
  5. 5,634.15 + 5,365.85 = ₹11,000 ✓

Frequently asked questions

What is the formula for simple interest?

Simple interest equals principal times rate times time divided by 100, where the rate is a percentage per year and time is in years. The total amount repayable is the principal plus that interest.

How do you find the instalment under simple interest?

Divide the total amount owed at the end of the term by the sum of what each instalment grows to by that date. The instalment equals P times one plus nR over 100, divided by n plus R times n times n minus one over 200.

Why is the instalment not just the total divided by the number of years?

Because each instalment is paid early and earns interest for the remaining years. Ignoring that would make you overpay, so the denominator credits every instalment with the interest it earns after payment.

What is the difference between simple and compound interest?

Simple interest is calculated only on the original principal, so it grows in a straight line. Compound interest is calculated on the principal plus accumulated interest, so it grows faster and faster.

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Compound InterestChit FundGPF InterestTDS Interest