Free Loan Interest Calculator
See how much interest a loan actually costs under the flat-rate method versus the reducing-balance method — no signup, nothing sent to a server. Want the monthly instalment instead? Use the EMI Calculator, or work backwards from an affordable EMI with the Loan Calculator.
Interest — flat rate
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Interest — reducing balance
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You save with reducing balance
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Full breakdown
- Flat-rate EMI
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- Flat-rate total payment
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- Reducing-balance EMI
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- Reducing-balance total payment
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How to compare interest methods
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1
Enter the loan amount
Type the principal you plan to borrow.
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2
Enter the quoted annual interest rate
Use the rate given by your lender.
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3
Set the tenure
Enter the repayment period in years or months.
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4
Compare both methods
See total interest and EMI side by side for flat rate versus reducing balance.
Example use cases
Reading the fine print
Check whether a loan offer quotes a flat or reducing rate before comparing it to another lender.
Consumer durable & gold loans
These often use flat-rate pricing — see the real cost before signing up.
Negotiating with a lender
Show the reducing-balance equivalent of a flat-rate quote to compare offers on equal terms.
Frequently asked questions
What is the difference between flat rate and reducing balance?
Flat rate charges interest on the full original loan amount for the entire tenure, even as you repay principal. Reducing balance charges interest only on what you still owe, so interest shrinks every instalment. For the same quoted rate, flat rate always costs more in total interest.
Which method do most lenders use?
Most banks and NBFCs use reducing balance for home, car, and personal loans. Flat rate is more common for some consumer-durable and older-style loans — always check your loan agreement to see which applies.
Why does the flat-rate EMI look similar but cost more overall?
A flat rate of, say, 10% typically works out to roughly double that as an equivalent reducing-balance rate, because interest keeps accruing on the original amount instead of the shrinking balance.
Is my financial information sent to a server?
No. The calculation runs entirely in your browser — nothing is transmitted or logged.