Flat vs Reducing Interest — EMI & Cost Comparison
See how the same loan differs under flat interest vs reducing balance interest.
Free No sign-up Updated October 2025

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₹
₹10,000 – ₹10,00,00,000
%
Common for some NBFC schemes.
%
EMI is computed on reducing balance.
months
6 – 240 months (or 0.5 – 20 years).
%
Added as upfront cost; EMI doesn’t include fee.
Flat schedule
Reducing schedule
Flat schedule shows constant monthly interest (= Principal × annual flat rate ÷ 12). Principal portion rises as balance reduces. Reducing schedule computes interest on outstanding each month.

Formulas

Flat interest: Total interest = P × (annual rate/100) × (n/12), EMI = (P + interest) / n.
Reducing balance EMI: EMI = P × r × (1 + r)n / ((1 + r)n − 1), where r is monthly rate (annual ÷ 12 ÷ 100), n is months.