What you provide
What you provide
- Loan principal: Original amount financed under both methods.
- Headline annual rate: Same numeric rate used to expose the method difference.
- Repayment term: Whole years used by both comparisons.
LOANS / RATE METHOD
Flat vs Reducing Balance Calculator
Compare a flat-interest quote with reducing-balance amortization using the same principal, headline annual rate, and repayment term.
- 01 Calculated in this tab
- 02 Values stay in this browser tab
- 03 Use boundary
Use boundary
Calculation path
Flat interest stays tied to original principal for every year. Reducing-balance interest is embedded in an amortized payment and falls as principal is repaid.
Calculation path
Flat interest = original principal x rate x years; reducing payment uses monthly amortization.
What you receive
What you receive
- Monthly payment under each method
- Total interest under each method
- Estimated extra cost of the flat method
Use boundary
Choose the maximum decimal places shown. This does not increase source accuracy.
A flat rate and reducing rate with the same percentage are not economically equivalent; use the method stated in the contract.
This is an educational planning estimate. Confirm lender, issuer, tax, accounting, and contractual rules with the relevant provider or qualified adviser before acting.