Flat Interest Compared to Reducing Balance
Compare flat interest with amortized repayment at the same stated rate.
Your numbers
Monthly payment for flat-interest method
The same quoted rates no mean the same borrowing costs. Fees and lender rounding no join.
Compare scenarios
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Formula
Flat interest na I = Pjn/12; payment for reducing balance na A = P/a(j/12,n). P na principal, j na nominal yearly interest fraction, and n na months. a(r,n) add monthly discount factors at rate r.
Compare flat interest with amortized repayment at the same stated rate.
Example wey show the calculation
- Principal
- 12000
- Nominal interest rate for one year (%)
- 6
- Term in months
- 12
- Monthly payment for flat-interest method
- 1,060
- Monthly payment for reducing-balance method
- 1,032.79715648
- All interest for flat-interest method
- 720
- All interest for reducing-balance method
- 393.56587782
Where e fit work and limits
The same quoted rates no mean the same borrowing costs. Fees and lender rounding no join.
We check inputs for missing values and allowed ranges. Result wey pass the finite numeric range no go show. Rounding affect wetin display, while calculation use the model numeric precision.
Check your units and assumptions before you rely on result. Changing label no convert currency or physical unit.
Version of di formula: 0f5b61344261 · Example don get check: