Flat vs Reducing Balance Interest Calculator
A 10% flat rate can cost like ~18% reducing. Compare EMI and total interest under both methods before signing any loan agreement.
Flat EMI (illus.)
₹18,888.89
Reducing EMI
₹16,607.15
Flat total interest
₹1,80,000
Flat rate quotes often understate cost vs reducing balance-always compare total outgo.
Figures are mathematical illustrations only and not a promise of performance. Mutual funds, deposits, loans, and insurance are offered by respective institutions-please read scheme documents and terms before investing or borrowing.
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Flat vs reducing balance EMI - how to use this tool
Compare monthly EMI under flat interest vs standard reducing balance loans.
A flat interest rate keeps charging on the original principal; a reducing balance rate charges only on what you still owe. This flat vs reducing rate calculator converts one into the other so you can compare loan offers on a like-for-like basis-the gap is often bigger than the sales pitch suggests.
Adjust sliders to stress-test assumptions, review the visual breakdown where shown, and export or share results. For a documented plan, talk to Saarthi Capital.
Browse the full calculator hub for SIP, EMI, FD, tax, and more.
Frequently asked questions
What is the difference between flat rate and reducing balance rate?
A flat rate charges interest on the original principal for the entire tenure; a reducing balance rate charges interest only on the outstanding principal, so the true cost is far lower for the same quoted number.
How do I compare a flat-rate offer with a reducing-rate loan?
Convert the flat rate to its effective reducing-balance equivalent-as a rough guide, the effective rate works out close to 1.8-2 times the flat rate depending on tenure. This calculator shows the difference in rupees.
Why do lenders quote flat rates?
Because a flat rate looks smaller. A 10% flat rate can cost roughly what an 18% reducing rate would-always ask for the reducing-balance or APR figure before signing.
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