Trying to understand loan rates?
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?
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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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