CibilBazaar
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Continue with GoogleLenders quote loan interest in two ways: a flat rate and a reducing-balance rate. The two look similar on paper but cost very different amounts. Use the CibilBazaar Reducing vs Flat Rate Calculator to convert a flat rate into its equivalent reducing rate (or the other way round) and compare the EMI and total interest.
Enter the loan amount, the quoted interest rate and the tenure, choose the conversion direction, and see the real cost of the loan instantly.
You may also find our EMI Calculator and Loan Prepayment Calculator useful.
In a flat-rate loan, interest is charged on the full original loan amount for the whole tenure, even though you keep repaying the principal. In a reducing-balance loan, interest is charged only on the outstanding principal, so it falls as you repay.
Flat rate: Interest = P × flat rate × years, and EMI = (P + Interest) ÷ number of months. Reducing rate: EMI = [P × r × (1 + r)^n] ÷ [(1 + r)^n − 1], with r as the monthly rate. The equivalent reducing rate is the rate at which the standard EMI formula gives the same EMI as the flat-rate loan.
Type the amount you plan to borrow.
Pick Flat → Reducing or Reducing → Flat.
Add the rate the lender has offered.
Choose the repayment period in months or years.
Check the equivalent rate, EMI and total interest for both loan types.
A flat rate ignores the principal you have already repaid, so interest stays high all the way.
The gap between flat and reducing rates widens as the tenure grows.
The equivalent reducing rate is often roughly 1.6 to 1.9 times the flat rate, depending on tenure.
Know the real annual rate behind a flat-rate offer.
Put flat and reducing quotes on the same footing before choosing.
Spot loans that look cheap but cost more over the full tenure.
Save the comparison as a file or share the link.
Always ask the lender for the reducing-balance rate or the annual percentage rate (APR), including all fees, before you compare offers.
Processing fees and other charges are not included in this calculation. Results are estimates only.
A flat interest rate is charged on the original loan amount for the entire tenure, regardless of how much principal you have already repaid.
A reducing-balance rate is charged on the outstanding principal only. As you repay each EMI, the interest portion falls.
At the same quoted number, a reducing rate is always cheaper. For example, 8% reducing costs far less than 8% flat.
Work out the flat-rate EMI, then find the interest rate at which the standard EMI formula gives that same EMI. This calculator does it for you instantly.
Home loans in India are quoted on a reducing-balance basis. Some vehicle, two-wheeler, consumer-durable and small personal loans may be quoted on a flat basis. Check your loan offer.
No. Fees, GST and other charges are not included, so the effective cost of your loan may be higher.
Disclaimer: Rate conversions are estimates provided for informational purposes only and do not constitute financial advice or a loan offer. CibilBazaar is a loan marketplace and is not a bank or NBFC. Please verify the latest information with the relevant bank or NBFC before submitting your application.
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