Flat rate to reducing balance rate Excel calculator
Few banks in UAE quote their interest rates in Flat rate. I have previously written on Personal Loan interest rate. Read it HERE.
A flat rate is a type of interest rate which is calculated on the entire amount of loan throughout its tenure. For example, if you take a car loan for AED 50,000 the interest charged is, let’s say 5%. Now this 5% is charged on the entire AED 50,000 throughout the tenor.A reducing balance interest rate is the one where the interest is charged on the outstanding principal amount after monthly deductions.
Borrowers need to beware of the banks charging flat rate of interest as this is not expressively published; but in most cases hidden in the ‘star’ mark. To make it easy for you to calculate what the effective rate of interest will be here is a calculator to covert Flat interest rate to a reducing balance interest rate.
Having your loan denominated in Reducing balance interest rate may save you a lot of money.
I have received many emails asking me to provide the Reducing Balance to Flat rate excel calculator. You can download the excel calculator below by entering you details. It contains Ammortisation, Flat to Reducing and Reducing to Flat calculator. Once you enter your details, you will receive an email with the download file of Excel Calculator:
I believe this will help you.