Flat rate of interest VS reducing balance rate of interest 

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As we get started in 2021, its crucial that we get our finances in order. In this episode, we talk about Difference between Flat rate of interest and reducing balance rate of interest.
These are two banking terms that many borrowers do not bother to even look at, yet they form a very integral part of the cost of getting the loan.
The bank employees or agents who deal with you, showcase mostly the glossy side of the image. They may not tell you the detailed conditions and other important things in advance. Therefore, it becomes necessary to get the insights well, before you land yourself into any trap.
Flat interest rate, as the term implies, means an interest rate that is calculated on the full amount of the loan throughout its tenure without considering that monthly loan payments gradually reduce the principal amount.
Reducing/ Diminishing balance rate means an interest rate that is calculated every month on the outstanding loan amount.
VIDEO CHAPTERS
Intro 00:00
What is flat interest 01:35
Is interest per annum or per month? 02:13
What is reducing balance interest 03:12
Practical look at flat interest 04:02
Practical look at reducing balance 08:01
Comparison flat vs reducing balance methods 12:01
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FINANCIAL DISCLAIMER
The information contained on this video and this Channel is not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information contained on this video and Channel is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.