Flat Rate vs. Reducing Rate: Mastering Loan Interest Methods for DSAs
Learn how flat and reducing interest works and which is better for clients.
This module helps DSAs understand the two primary methods lenders use to calculate interest on loans — flat rate and reducing rate — and how these methods impact the actual cost of borrowing.
In this presentation, you will learn:
What flat interest rate means and how EMIs are calculated
What reducing (or diminishing) rate of interest means
Differences between flat and reducing rate calculations
How interest cost varies across both methods
Examples comparing total interest outgo and EMIs in both cases
When each method is typically used by lenders
How to explain the impact to clients in simple terms
Why understanding interest method matters for loan decisions
This module breaks down financial math into easy-to-understand steps so that even beginners can confidently explain loan interest methods to clients.
By the end of the session, you will be able to help clients understand how interest is calculated on loans and guide them toward more informed borrowing choices.
