Trying to understand loan rates?

New To Town Banking Money 3263 times1 answer1 follower
Tom 1.09K Rep. elliemartin1 edited question

I’m confused with the use of the terms ‘Flat Rates’ and ‘Reducing Rates’ which one do I use when working out how much interest will be charged on a loan I plan to take out?



elliemartin1 3.67K Rep. elliemartin1 edited answer

The term ‘flat rate’ is where a payment charge/level stays the same in all cases, it is fixed.

‘Reducing rate’ means that as a payment is made on the amount of a loan, the interest payment reduces itself too.

This is dependent on the loan you have taken out – whether it was advertised as reducing rates or flat rates.

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