Flat Interest Calculator

Interest is a constant when you borrow money. However, the way interest is calculated on a loan can vary. So, when you get a personal loan from a financial institution, you will be charged interest on a flat or reduced rate basis. Suppose you prefer a flat-interest rate loan. In that case, our flat interest rate calculator above can help you calculate your EMI amount and the total interest component payable during the repayment period. Read on to understand more about this useful tool. 

Flat interest rate calculator, explained

The CoinSwitch flat interest rate calculator is an online tool designed to help users calculate the EMI and the interest payable during the loan tenure. 

The calculator makes such computing very easy and enables users to compare the amounts payable under the flat rate and reducing rate scenarios to help them choose wisely.

What’s more, the online availability of the flat interest rate calculator makes it easily accessible.

Understanding flat interest rate

As discussed above, reducing and flat interest rates apply to personal loans. Selecting between the two is mostly a user preference. Typically, loan takers who prefer fixed EMIs and don’t want to get into complicated calculations opt for flat interest rates. In practical terms, the interest rate and the monthly amount payable remain the same during the repayment period. 

On the other hand, the reduced interest rate is best understood in comparison with the flat interest rate. Here, the interest will be calculated on the outstanding principal amount. In other words, interest will apply to the reduced principal amount after payment of every EMI. Thus, the interest rate reduces with repayment. The flexibility in paying EMIs makes this option attractive to borrowers.

The functioning of the flat interest rate calculator

The flat interest rate calculator is user-friendly with clear prompts for all its input fields. All you need to do is plug in the numbers accurately to get precise results: 

• Amount of loan

Enter the exact amount you are planning to borrow. This is necessary to compute the interest payable and the EMI. 

• Annual rate of interest

The annual rate of interest at which the loan is being offered to you. Your interest amount will depend on the rate of interest and thus accuracy is important. 

• Tenure of the loan

     Essentially, the repayment period. It can be in months or years.

Once you enter the correct numbers, the calculator will use them to compute the EMI amount, the total interest payable during the loan tenure, and the total outgoing amount which comprises the principal repayment plus the interest. 

The math behind calculating flat interest rate

If you prefer to do the calculation the traditional way, you can apply the below formula to calculate the total interest payable in the flat interest method: 

Total Interest = (P * R * T)/100

Where:

P = Principal amount

R = Rate of interest

T = Tenure in years

By adding the principal amount with the total interest amount, you will get the total outgoing amount during the entire loan tenure.

The EMI calculation formula for flat interest rate loan is as follows: 

Monthly EMI = ( P + (P *R* T)/100) / T*12  

Where:

P = Principal amount

R = Rate of interest

T = Tenure in years

How the flat interest rate calculator can help you

The flat interest rate calculator can be useful if you opt for a personal loan. We list below some of the benefits of using a flat interest rate calculator like the one above.

• Gets the number right

Computing the loan EMI and the total interest payable during the loan tenure can be a big hassle. The flat interest calculator will provide you with the EMI and the total interest amount within seconds.  

• Helps you plan your finances

Getting a loan might be easy, but the repayment process is not. It requires financial discipline and can also impact your monthly budget. The flat interest rate calculator will give you a clear visibility into the future to help you plan your finances.

• Saves time

Manual loan amount calculations are time-consuming. Our flat interest rate calculator will save you time, which you can productively use elsewhere.

Conclusion

In this personal finance blog post, we introduced you to the two modes of availing a personal loan: reducing and flat interest rate loans. The article also explained how our flat interest rate calculator will help you calculate the loan EMI and the interest component.