Flat vs Reducing Rate Loan Calculator
Compare flat and reducing interest rates to understand the true cost of your loan. Essential for car loans and personal finance in the GCC.
True Cost Analysis
Enter your loan details to see the exact monthly installment, total interest, and the equivalent rate for comparison.
About Flat vs Reducing Interest Rates
In the GCC, loans are typically quoted in two ways: Flat Rates and Reducing Rates. Understanding the difference is critical before signing any financial agreement.
A flat rate calculates interest on the original principal amount throughout the entire tenure, ignoring the fact that you are paying off the loan every month. A reducing rate calculates interest only on the outstanding balance, meaning your interest payments decrease over time. As a rule of thumb, a flat rate is roughly equivalent to a reducing rate that is 1.8x to 2x higher.