Guide
Understand your Flat vs reducing rate result
A flat vs reducing EMI calculator shows why two loans with the same amount, rate, and tenure can have different monthly payments and total costs. Flat interest uses the original principal, while reducing-balance interest follows the outstanding loan balance.
Results are for general information. Review the site disclaimer before using a result for an important decision.
Flat vs reducing EMI: why loan cost differs
With the flat method, interest is calculated from the original loan amount across the full tenure and added to the principal. The combined amount is then divided into instalments.
With the reducing method, each payment reduces the outstanding principal. Future interest is calculated on that smaller balance, which is why the interest cost normally falls over the repayment schedule.
Compare total cost, not only the quoted rate
Enter the same loan amount, rate, and tenure to see the difference created by the calculation method. Review the estimated monthly payment, total interest, and total repayment together.
The equivalent reducing rate is an estimate of the annual reducing-balance rate that would produce a monthly payment similar to the flat-rate instalment. It helps make unlike rate quotes easier to compare.
Use the lender's written figures for a decision
Processing fees, insurance, taxes, advance instalments, residual payments, and lender-specific rounding are not automatically included. Add those costs when they appear in an offer.
Before accepting a loan, compare the Key Fact Statement, repayment schedule, annual percentage rate where provided, fees, and prepayment terms. The calculator is a planning estimate, not a lender quotation.