Flat vs Reducing Rate Calculator
Comparison Result
Flat Rate EMI
₹ 0
Reducing Balance EMI
₹ 0
Flat Rate is effectively
0% Reducing
Comparison: A Flat Rate of
X% is significantly more expensive than a Reducing Rate of X%.
Flat vs Reducing Interest Rate
Flat Rate: Interest is calculated on the full principal amount for the entire tenure.
Reducing Rate: Interest is calculated only on the outstanding principal balance each month.
Key Takeaway
Always check if a bank is quoting a Flat Rate or Reducing Rate. A 10% Flat Rate is roughly equivalent to an 18% Reducing Rate!