Reducing-balance rates
A reducing-balance rate charges interest only on what you still owe, which is how APRs and most UK loans work. A flat rate charges interest on the original amount throughout, so the same payment corresponds to a much higher reducing rate.
The calculator shows the reducing-balance interest rate (monthly rate × 12) and the APR for your flat-rate loan.
Worked example
A £15,000 car loan at a 4.5% flat rate over 48 months has an EMI of £368.75. That's the same as a reducing-balance rate of about 8.4%, or an APR of about 8.7%.
Comparing offers
Convert any flat-rate offer before comparing it with reducing-balance loans.
Inputs for the EMI calculator car loan reducing rate
Amount borrowed
The amount of the loan.
Flat interest rate (per year)
The flat rate you've been quoted, charged on the original amount for the whole term.
Term
How many months the loan lasts.
CALCULATOR QUESTIONS
Reducing rate car loan EMI calculator questions
What is a reducing-balance rate?
Interest charged only on the amount you still owe.
How do I convert a flat rate?
Enter it above; the calculator finds the reducing rate with the same payments.
What is an EMI?
Equated monthly instalment: the fixed monthly payment.
Which rate is cheaper?
Compare like with like: the reducing rate or APR.