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Flat vs reducing rate calculator
A “9% flat” loan is not a 9% loan. Find the real rate before you sign.
Why flat rates mislead
A flat rate charges interest on the full amount borrowed for the whole tenure, even though you repay part of it every month. On ₹5 lakh at 9% flat for three years, the interest is ₹1.35 lakh and the EMI ₹17,639. The same EMI on a normal reducing-balance loan implies a rate of about 16.2%, nearly double the headline.
Flat EMI = (P + P × flat rate × years) ÷ months
Where you will meet flat rates
Some two-wheeler, consumer durable and used-car loans, and some informal lenders. Regulated lenders must disclose the annual percentage rate in a key fact statement; ask for it and compare it with the reducing rate above.