What is the difference between Flat and Reducing interest types while dealing loans?

Oct 27, 2025

Flat Interest: Charged on the total loan amount throughout the repayment period.
Example: For a ₹12,00,000 loan at 3% interest, 3% is applied on ₹12,00,000 each period.
Reducing Interest: Charged on the outstanding balance after each EMI repayment.
Example: If ₹1,00,000 has been repaid, interest next period applies to ₹11,00,000.

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