Glossary
Reducing Balance Interest
What it means
Almost all bank and NBFC term loans charge interest on the reducing balance: each month's interest is computed on what you still owe, not the original amount. This is the standard on which EMIs are calculated.
Beware of 'flat rate' quotes, common in some dealer finance and informal lending, where interest is computed on the original principal for the whole tenure. A 10% flat rate is roughly equivalent to 18% on reducing balance. Always compare on the reducing-balance rate, which the Key Fact Statement must show as an annual percentage rate.
Where it applies
Car Loan
New car loans covering up to 100% of on-road price at rates from about 8.5% p.a., with tenures up to 7 years, across banks and captive finance companies.
- Rate from
- 8.50% p.a.
- Up to
- ₹2 Cr
Personal Loan
Collateral-free personal loans from ₹50,000 to ₹50 lakh at rates starting around 10.25% p.a., with disbursal typically within 48 hours of approval.
- Rate from
- 10.25% p.a.
- Up to
- ₹50 L
Ready when you are.
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