Advanced Loan Calculator
Compare flat vs reducing balance interest methods and generate amortization schedules.
Loan Configuration
Instantly generate a full amortization schedule based on flat or reducing balance.
Comparing Flat vs. Reducing Balance Loans
Understanding exactly how your bank or SACCO calculates loan interest is the most important factor in borrowing smart.
- Reducing Balance: Interest is charged solely on the remaining principal balance. As you pay off the principal each month, your interest portion drops, often making this the cheaper option.
- Flat Rate: Interest is calculated on the original principal amount throughout the entire term. This results in much higher total interest paid compared to a reducing balance loan at the exact same percentage rate.
Using FedhaHub's advanced amortization engine, you can instantly compare both methods and determine the true "Effective Annual Rate" (APR) of your financial commitments.