Flat vs Reducing Rate Calculator
See what a flat interest rate really costs. Enter the loan amount, flat rate and tenure to find the equivalent reducing-balance rate and the extra interest you pay.
The flat rate quoted by the lender. Flat rates always look lower than the real cost of the loan.
EMI (Flat Method)
₹23,333
Total Interest (Flat)
₹4.00 L
Effective Reducing Rate
14.13%
What the flat rate really costs
A flat rate of 8.00% on this loan is actually equivalent to a reducing-balance rate of 14.13%. A true reducing-balance loan at 8.00% would charge only ₹2.17 L in interest, so the flat structure costs you ₹1.83 L extra.
Always ask whether a loan rate is flat or reducing. Banks and NBFCs must disclose the reducing-balance (effective) rate, but informal lenders and some dealers quote only the flat rate.