Reducing Balance — Reducing Balance Interest
Loans term
Reducing-balance interest is charged only on the outstanding loan balance, which shrinks with every EMI — so the interest portion falls over time.
It is the standard method for home, car and personal loans, and is far cheaper than flat-rate interest for the same quoted rate. Always compare loans on their reducing-balance (effective) rate.
More loans terms
EMIAn EMI is the fixed amount you pay your lender every month until a loan is repaid — covering both interest and principal.Loan TenureThe tenure is the total length of a loan — the number of months or years over which you repay it.PrepaymentPrepayment is paying off part or all of a loan ahead of schedule, which directly reduces the outstanding principal.CIBIL ScoreA CIBIL score is a 3-digit number (300–900) summarising your credit history, used by lenders to decide whether to lend and at what rate.Floating RateA floating interest rate moves up and down over the life of a loan, tracking a benchmark such as the RBI repo rate.