How do I benefit if the interest is calculated on a daily reducing balance?

1 ANSWERS

1. Guest6159
   

   In a flat rate of interest (which is what many other players charge), the interest is calculated for the full tenor of the loan on the amount advanced. In effect you continue to pay interest on the amount you have already repaid. Similarly, on an annual reducing balance method, you will continue to pay interest on amounts you repay during the coming one year.
   
   In the case of the daily/monthly reducing balance, which is the methodology we employ, your interest is calculated only on the outstanding loan amount, which reduces every time you pay off your EMIs or make any prepayments. This in essence lowers your effective rate of interest significantly.

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