Flat vs Reducing Rate Calculator
Convert a flat interest rate into its true reducing-balance rate and see how much more a flat-rate loan costs.
How to use the Flat vs Reducing Rate calculator
- Enter loan amount, flat rate and tenure.
- Read the equivalent reducing rate at the top of the result, with eMI at the flat rate, total interest (flat), interest at the same rate if reducing underneath. It updates as you type.
- Change one input at a time to see what moves the answer most, then save the result with Copy link or Download PDF.
About this tool
A flat rate charges interest on the full original amount for the whole tenure, even as you repay. That makes a 9% flat rate cost about the same as a 16–17% reducing rate.
Formula: Flat EMI = (P + P·flat·years) ÷ n; reducing rate solved so the reducing-balance EMI equals it
Worked example
With loan amount of ₹2,00,000, flat rate of 9% and tenure of 24 months:
| Equivalent reducing rate | 16.43% |
| EMI at the flat rate | ₹9,833 |
| Total interest (flat) | ₹36,000 |
| Interest at the same rate if reducing | ₹19,287 |
Built and reviewed by Savitar Finance (savitarfinance@gmail.com). Rules and rates last checked October 2026. How we calculate · Report a problem
Questions people ask
What is the difference between flat and reducing interest?
Flat interest is charged on the original principal throughout. Reducing interest is charged only on what you still owe, so it falls every month.
Why do dealers quote flat rates?
Because the number looks lower. Always ask for the reducing-balance rate (APR) before signing.