Flat -vs- Reducing Balance Interest Rate EMI Calculations


Check the EMI Calculations for Flat vs Reducing Balance Interest Rate.

In Flat Interest Rate loans, interest is calculated on the initial principal amount througout the loan tenure.

In Reducing Balance Interest Rate loans, interest is calculated on the remaining principal amount at any time.

Flat interest rate is normally used by vehicle finance companies.

Loan Parameters
Loan Amount         
Loan Term       years
EMI Start Date
Interest Rates

Flat Rate                    %
Reducing Balance Rate %




Flat Rate - 9.00%

Loan Amount = 1,00,000
EMI = 2,833
Total Interest = 36,000
Total Payments = 1,36,000
Periods = 48 months
Last EMI Date = 20-September-2021
Check Amortization Table

Reducing Balance Rate - 15.99%

Loan Amount = 1,00,000
EMI = 2,834
Total Interest = 36,009
Total Payments = 1,36,009
Periods = 48 months
Last EMI Date = 20-September-2021
Check Amortization Table
EMI Difference
9.00% 15.99%
2,833 2,834

0

Total Interest Difference
9.00% 15.99%
36,000 36,009

9

Repayment Chart

Flat Rate - 9.00%

Repayment Chart

Reducing Balance Rate - 15.99%

Below are some examples of how flat rate and reducing balance rates for the same loan amount and tenure. You can observe that, for a flat interest rate of 10.00% means around 17.5% normal interest rate.
Calculations for 9.00 % Flat Interest Rate
Loan Tenure Flat Rate Reducing Balance Rate Compare
1 Year 9.00% 16.22% Compare
2 Years 9.00% 16.43% Compare
3 Years 9.00% 16.25% Compare
4 Years 9.00% 15.99% Compare
5 Years 9.00% 15.72% Compare
* Click on compare link to check acutal rates.
Calculations for 10.00 % Flat Interest Rate
Loan Tenure Flat Rate Reducing Balance Rate Compare
1 Year 10.00% 17.97% Compare
2 Years 10.00% 18.15% Compare
3 Years 10.00% 17.92% Compare
4 Years 10.00% 17.60% Compare
5 Years 10.00% 17.27% Compare
* Click on compare link to check acutal rates.

EMI Calculator
Calculate EMI (Equated Monthly Installment) for a fixed rate loan spanned across years with annual and monthly amortization tables.
Loan Amount  ₹ 
Loan Term     years
Interest Rate %



Flat Rate EMI Calculator
Calculate EMI for a flat rate loan with annual and monthly amortization tables
Loan Amt
Loan Term    years
Flat Rate   %


Compare EMI Calculations
Compare EMI calculations for 2 interest rates. See how EMI and total interest amount change for different interest rates and the same loan amount and tenure. Useful when bank interest rates are changes for existing loans.
Loan Amount  ₹ 
Loan Term     years
Interest Rate 1 %
Interest Rate 2 %



Convert Flat to Reducing Balance Interest Rate
This tool finds the effective interest rate for a flat rate interest loan.
Loan Amount      ₹   
Loan Term       years
Flat Interest Rate %