Compare a flat-rate loan quote with its reducing-balance equivalent, or convert a reducing quote back to the flat-rate figure that charges the same total interest.
Why does a flat rate look smaller than the reducing equivalent?
Because the flat rate keeps charging on the original principal even after you have repaid a large part of the loan. The reducing rate charges only on what is still outstanding, so the annual percentage has to be higher to collect the same money.
Which quote should I trust when comparing lenders?
Compare everything on the reducing-balance side if you can. That is the industry-standard loan shape for EMI products. A flat quote needs conversion before it can be compared honestly with an EMI quote.
Why does the page give two monthly payments?
So you can see that the conversion worked. The flat monthly payment and the reducing-balance EMI should match closely once the equivalent rate is found.
Does this include fees or insurance?
No. It compares the interest structures only. Processing fees, insurance, and taxes can still change which real-world offer is cheaper.
Is flat interest ever standard for formal retail loans?
It still appears in marketing for some vehicle, consumer durable, and small-ticket products, and it remains common in informal lending. The problem is not that it exists. The problem is comparing it directly with a reducing-balance EMI quote as if the percentages meant the same thing.