Understand the true cost difference between flat interest rate and reducing balance rate loans.
Flat rate: Interest is calculated on the original loan amount throughout the tenure. Often quoted by NBFCs and some lenders — sounds low but costs more.
Reducing balance rate: Interest is calculated on the outstanding principal each month. As you repay, the interest reduces. This is what banks use — the standard method.
A flat rate of 14% is roughly equivalent to a reducing rate of 25-26% — nearly double! Always ask lenders for the reducing balance rate.