Loan Calculator Kenya: Flat Rate vs Reducing Balance

Work out the real cost of a loan in Kenyan shillings. Enter the amount, rate and repayment plan to compare flat rate and reducing balance interest side by side. You'll see each installment, the total cost of credit, the APR and the full repayment schedule.

How this loan calculator works

The calculator turns your rate into a rate per installment, then applies three common methods.

• Flat rate: interest = amount × rate per installment × number of installments. Every installment is the same.
• Reducing balance, equal principal: the same principal is repaid each time, plus interest on the balance still owed, so installments get smaller.
• Reducing balance, equal installments: one fixed installment that covers interest on the falling balance, the method banks usually use.

A monthly rate is converted for weekly or bi-weekly repayments (for example, 2% a month is about 0.46% a week). A rate "for the whole loan" is spread evenly across the installments. The APR includes any processing fee, treated as deducted from the amount you receive. Installments are rounded to the cent.

For worked examples and when to use each method, read flat rate vs reducing balance interest in Kenya.

For lenders: stop calculating loans by hand

Manual interest calculations cause disputes and lost revenue. In Lendpoint, each loan product is set to flat or reducing balance once. The full schedule, including fees, is calculated and fixed at approval, sent to the borrower and collected through M-Pesa automatically.

Frequently asked questions

How do I calculate loan interest in Kenya?

Flat rate interest is the principal times the rate per period times the number of periods. Reducing balance interest is the outstanding balance times the rate for each period, added up over the loan. Enter your loan in the calculator to see both, side by side.

What is the difference between flat rate and reducing balance?

Flat rate charges interest on the original amount for the whole term. Reducing balance charges interest only on what is still owed, so it costs less at the same headline rate. On KES 100,000 at 2% a month for 12 months, flat costs KES 24,000 in interest and reducing balance about KES 13,000.

What is APR and why does it matter?

The annual percentage rate (APR) shows the yearly cost of a loan including interest and upfront fees, so loans with different rate methods and fees can be compared fairly. Lenders licensed by the Central Bank of Kenya must disclose the APR and total cost of credit before you borrow.

How are processing fees included?

The calculator treats the processing fee as deducted from the amount you receive. It adds the fee to the total cost of credit and includes it in the APR, because you repay the full loan but receive less cash.

What does 'rate for the whole loan' mean?

Some lenders quote one rate for the full term, for example 10% on a 4-week loan, instead of a monthly or yearly rate. Choose that option to spread the rate evenly across the installments.

Can lenders use this calculator for their loan products?

Yes. It uses the same flat and reducing-balance maths as Lendpoint's loan management system, where each product's schedule is calculated automatically and fixed at approval.