Flat vs Reducing Rate
Don't get fooled by "lower" flat rates. Compare the true cost of flat vs reducing interest rates.
Loan Details
Interest Rates
Flat Rate Trap
A 10% flat rate is roughly equivalent to an 18-19% reducing rate. Always compare actual payable amounts!
₹0
You save this amount by choosing the reducing rate option.
Side-by-Side Comparison
Understanding Loan Interest
Flat Rate Interest
Interest is calculated on the original loan amount for the entire tenure. Even as you repay principal, interest remains the same. Often used by NBFCs and dealerships.
Interest = Principal × Rate × Time
Reducing Rate Interest
Interest is calculated on the outstanding balance. As you pay off principal, interest reduces. Used by banks and regulated lenders. This is the fairer method.
EMI = P × r × (1+r)n / [(1+r)n - 1]
Last Updated: January 2026
Disclaimer: This calculator provides estimates for educational purposes. Always verify with your lender for exact figures.
About the Flat vs Reducing Calculator
This flat vs reducing calculator helps you model financial decisions with accurate formulas and clear outputs. Compare flat vs reducing interest rates on loans.
Use when comparing loan terms, investment returns, taxes, or savings scenarios before making money decisions.
Adjust the inputs above to model your specific scenario with the Flat vs Reducing Calculator.
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