Flat Rate Loan Calculator

Flat Rate Loan Knowledge Base

• 1. What is a flat rate loan?
  A loan where interest is calculated on the original principal for the entire duration of the loan.
• 2. How is interest calculated?
  Interest = Principal * Annual Rate * Term. This total is added to the principal to compute total repayment.
• 3. How are installments derived?
  Total Payment (Principal + Interest) is divided equally over the number of periods (e.g., months).
• 4. Where are flat loans used?
  Common in microfinance, personal loans, hire purchase agreements, and short-term credit.
• 5. Are flat rate loans expensive?
  Yes, the effective interest rate is usually higher than the stated rate since the interest is on full principal, not reducing balance.