Flat vs reducing interest rate (फ्लैट बनाम घटती-शेष ब्याज दर)
A flat rate charges interest on the full original loan amount for the whole tenure, while a reducing-balance rate charges only on what you still owe. The same rate number costs far more on flat, which is why the KFS-mandated APR is the honest way to compare.
Worked example
₹1,00,000 at 12% flat for 12 months = ₹12,000 interest (monthly payment ≈ ₹9,333, total repayment ₹1,12,000). The equivalent reducing-balance rate is roughly 21–22% — nearly double the headline number.