Understanding how to calculate and compare flat and reducing-interest loans is essential for making informed financial decisions. A flat-interest loan may seem simpler but often results in higher total interest payments due to the interest being calculated on the full principal amount throughout the loan tenure. On the other hand, reducing interest loans offer lower overall interest costs as they calculate interest only on the outstanding balance. When considering a personal loan, it’s crucial to assess both the loan type and the total cost, including interest. By calculating both options, you can choose the loan that best suits your financial goals, ensuring more manageable repayments and long-term savings.
How to Calculate and Compare Flat and Reducing Interest Loans