Loan Interest Calculator
Work out how much interest a loan really costs. Many personal, vehicle and consumer-durable loans are quoted at a flat rate, which looks cheaper than it is. This calculator shows both methods side by side.
Loan details
Your result
Total repayment: reducing vs flat
Year-wise interest (reducing balance)
Flat rate vs reducing balance
Flat rate: interest is charged on the full original amount for the whole tenure, even though you repay part of it every month.
EMI (flat) = (P + total interest) ÷ months
Reducing balance: interest is charged only on the outstanding principal, so the cost falls as you repay. This is how most home loans work.
The effective rate is the reducing-balance rate that would produce the same EMI as the flat-rate offer. A 10% flat rate over one year is roughly 18% on a reducing basis.
Frequently asked questions
How do I know which method my loan uses?
Check the sanction letter or key fact statement. RBI rules require lenders to disclose the annual percentage rate (APR); if the quoted rate is much lower than the APR, the loan is probably flat-rate.
Why is the flat-rate EMI higher at the same rate?
Because interest is calculated on the full principal throughout, total interest is higher, and that extra interest is spread across the EMIs.
Does this include fees?
No. Add processing fees and insurance separately to understand the full cost of borrowing.