About this comparison
A flat interest rate is calculated on the original principal for the entire tenure, so the interest stays the same every month. A reducing balance rate is calculated on the outstanding principal, which falls as you repay, so the interest reduces over time.
For the same nominal rate, the flat rate results in a higher effective cost because you keep paying interest on money you have already repaid. This tool computes the EMI and total interest under both methods for the same loan.
Use it to compare loan offers fairly. A flat rate of 12% is roughly equivalent to a reducing rate of about 21%. Always check which method a lender uses before comparing rates.