Calculate monthly lease or loan installments in rupees, and see the real interest rate behind a flat-rate quote.
Monthly installment
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| Year | Paid | Still owed |
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Flat installment = (amount + amount × rate × years) ÷ months
Reducing installment = amount × r ÷ (1 − (1 + r)−months), where r = yearly rate ÷ 12
Example: Rs. 5,000,000 over 5 years at a 14% flat rate costs Rs. 3,500,000 in interest, an installment of Rs. 141,667. That's the same as about a 25% reducing rate.
Compare with a bank loan using the loan calculator.
A flat rate charges interest on the full amount for the whole term, even as you pay it off. A reducing (diminishing) rate charges interest only on what you still owe. A 14% flat rate is roughly the same as a 25% reducing rate, so always compare like with like.
Flat rates look lower and are easy to calculate. The calculator shows the equivalent reducing-balance rate (effective annual rate), which is the fair way to compare a lease with a bank loan.
Flat rate: (amount + amount × rate × years) ÷ months. Reducing rate: the standard loan formula, where each payment covers that month's interest and repays part of the balance.
No. Leases usually also require comprehensive insurance, and may have documentation charges or a stamp duty. Add those separately when comparing offers.