Flat vs Reducing Rate Calculator
Flat rates look lower than reducing rates — but cost more. Compare the two side by side.
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What is the Flat vs Reducing Rate Calculator?
A flat rate charges interest on the full original loan for the whole tenure, while a reducing rate charges interest only on the outstanding balance. A flat rate that looks cheaper is usually more expensive overall.
How to Calculate
Flat: total interest = principal × rate × years, spread across EMIs. Reducing: interest is charged on the shrinking balance each month.
Formula
Flat interest = P × rate × years; reducing uses the standard EMI formula.
How to Use
- Enter your details in the fields above.
- The result updates instantly as you type.
- Use Copy, Print or Download PDF to save your result.
Frequently Asked Questions
Why do lenders quote flat rates?
Because a flat rate looks lower than the equivalent reducing rate u2014 a 10% flat rate is roughly an 18% reducing rate. Always compare on a reducing basis.
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