Flat vs reducing interest calculator
Compare two quoted rates for the same loan amount and duration. A flat rate and a reducing-balance rate are not directly equivalent.
Estimated repayments
Flat interest
- Monthly instalment
- Total interest
- Total repayment
Reducing balance
- Monthly instalment (EMI)
- Total interest
- Total repayment
Assumptions and limits
Both calculations assume the entire loan is paid out at the start, constant rates and equal instalments at the end of each month. The reducing-balance calculation applies the annual nominal rate ÷ 12 to the outstanding principal each month.
Processing fees, taxes, insurance, penalties, advance instalments, prepayments, moratoriums and daily-interest calculations are excluded. This is not an APR or equivalent-rate calculator and does not determine which offer is suitable for you.
Amounts are calculated at full precision and displayed to two decimal places. A lender’s rounding rules or adjusted final instalment can change the totals slightly. Compare the lender’s repayment schedule and all charges.
The prefilled values are an illustration, not a current loan offer. Calculations run in this browser; this calculator does not send or store the values you enter.
Use the calculator to compare flat-interest and monthly reducing-balance estimates for the same loan amount and duration. Read the assumptions, then include all charges when comparing actual offers.
Flat interest
A flat-interest illustration charges interest on the original principal throughout the assumed period. Total interest = principal × annual flat rate × years. For ₹1,00,000 at ten-percent flat interest for one year, interest is ₹10,000. Dividing ₹1,10,000 into twelve equal payments gives about ₹9,166.67 per month, before fees.
Reducing balance
In a standard monthly reducing-balance model, interest is calculated on the outstanding principal. EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is principal, r is the assumed monthly rate and n is the number of payments.
Use the personal loan EMI calculator for a separate reducing-balance estimate under its displayed assumptions.
Compare the actual offers
A lower quoted percentage does not necessarily mean a cheaper loan when the calculation methods differ. Compare total repayments, fees, payment dates and the lender’s disclosed terms. Neither method makes an offer universally cheaper at every rate.
Last Updated on 1 week ago by Team Paisaseekho
