Flat vs Reducing Rate
Don't be fooled by low flat rates. Compare how much more you actually pay with a Flat Rate compared to a Reducing Balance Rate.
₹ 500,000
10%
5 Yrs
A Flat Rate of 10% is approximately equivalent to a Reducing Rate of 18.2%.
Flat Rate Path
Monthly EMI₹ 0
Total Interest₹ 0
Total Payment₹ 0
Reducing Rate Path
Monthly EMI₹ 0
Total Interest₹ 0
Total Payment₹ 0
Your Savings with Reducing Rate
₹ 0
Save 0% on interest
What's the Difference?
The Flat Rate Trap
In a Flat Rate loan, interest is calculated on the entire principal amount for the full term, even though you are paying back parts of the principal every month. You pay interest on money you've already returned!
The Reducing Balance Advantage
In a Reducing Rate loan, interest is calculated only on the outstanding principal. As you pay back the loan, the interest part of your EMI decreases and the principal part increases, saving you massive amounts in the long run.