Configure Inputs

₹5.00 Lakh
₹
₹1.00 Lakh₹10.00 Cr
135
10%
%
030
BEST CHOICE

Reducing Balance

Monthly EMI

₹16,134

Total Interest

₹80,809

EXPENSIVE

Flat Rate Method

Monthly EMI

₹18,056

Total Interest

₹1,50,000

Total Interest Comparison

Principal
Interest

⚖️ The Verdict

True Cost of Flat Rate:17.92%

A Flat Rate of 10% is mathematically equal to a Reducing Rate of 17.92%.

Total Extra Paid (Flat):₹69,191

Analysis & Results

Side-by-Side Comparison

MetricReducing BalanceFlat RateDifference
Monthly EMI₹16,134₹18,056+₹1,922
Total Interest₹80,809₹1,50,000+₹69,191
Effective APR10.00%17.92%+7.92%
Total Cost of Loan₹5,80,809₹6,50,000+₹69,191

Deep Dive & FAQ

Flat Rate vs Reducing Balance

When taking a loan, the Interest Rate isn't the only thing that matters. The Calculation Method is equally important.

Flat Interest Rate

Interest is calculated on the entire principal amount for the full tenure.

⚠️ Looks cheaper (e.g., 5%) but is actually much more expensive (~9-10% effective).

Reducing Balance Rate

Interest is calculated only on the remaining outstanding balance every month.

✅ This is the standard for Home Loans and is transparent.

The "Verdict" Feature

Our calculator specifically highlights the Difference between the two.

  • It shows you the Effective Interest Rate of a Flat Rate loan so you can compare apples to apples.
  • It clearly tells you how much extra interest you would pay with a Flat Rate scheme.