INDIA · LOAN INTEREST QUOTES
Flat vs Reducing Balance Loan Interest Calculator
A flat rate of 10% and a reducing-balance rate of 10% are NOT equivalent borrowing costs. Compare quoted structures before accepting vehicle, personal or business finance.
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Calculation results
FLAT and REDUCING percentages are not equivalent; insert actual quoted rates. Excludes fees, GST and regulator-defined APR.
An estimate, not a bank deposit rate, tax assessment or lender approval.
When and how to use
For ₹1,00,000 borrowed over two years at a quoted flat 10%, flat interest is ₹20,000; repayment is ₹1,20,000 over 24 months, or ₹5,000 monthly. A 10% nominal reducing-balance EMI quote produces a different payment and interest cost.
- Get the EXACT flat or reducing rate type from each lender's offer. Copy the REAL rates into separate fields; the model does not convert one quoted rate into the other.
- Enter actual disbursed principal and common repayment term. The flat quote uses principal × flat rate × years; the reducing quote uses monthly amortization at annual nominal rate ÷12.
- Compare totals, but require the legally applicable APR, KFS, upfront charges and processing fees before selecting the lender.
Understanding the result
Simple flat original-principal annual charge versus level EMI reducing-balance nominal annual rate /12. Excludes processing fees, GST, mandatory insurance, day-count differences, loan disbursement schedules and statutory effective APR calculation.
Frequently asked questions
Are flat 10% and reducing 10% equivalent?
No. Flat interest is charged on the original principal for the full quoted period; reducing balance interest declines as principal is repaid.
Does the lower monthly payment always win?
No. APR and all-in charges can change the true cost. Verify total interest, fees, insurance and penalties.
Does RBI require a Key Facts Statement?
Rules vary by regulated lender and product; check RBI's current KFS disclosure requirements and the contract. The illustrative formula here does not issue an official APR.
Reference and calculation limits
Independent guidance; not an RBI-approved calculator.