How this calculation works
Compare the monthly payment and total interest produced by flat-rate and reducing-balance loans. The result is calculated locally in your browser from the visible inputs, and the method below remains available for checking.
Worked example
A ₹10 lakh five-year loan at 10% shows why the flat-rate payment and interest exceed a reducing-balance quote at the same stated rate.
Assumptions and limits
- Both comparisons use the same principal, stated rate and repayment term.
- Fees, taxes, insurance and prepayments are excluded.
Questions people ask
How does the Flat vs Reducing Rate Calculator work?
It applies this displayed method: Flat-rate interest = principal × annual rate × years. Reducing-balance EMI uses the outstanding principal each month at the same nominal annual rate. Values stay in your browser and are not submitted to a server.
What should I check before using the Flat vs reducing rate result?
Both comparisons use the same principal, stated rate and repayment term. Fees, taxes, insurance and prepayments are excluded. This is an estimate, not a lender quote. Rates, fees, rounding and repayment rules vary by agreement.
Does this Flat vs reducing rate calculator save my information?
No. Calculation inputs are processed on this device. Sharing creates a URL only when you choose the share action.