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Flat Rate

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(Querist)
06 December 2007 What do you mean by Flat Rate in the system of providing loan by Banks ? Explain the procedure of granting loan by banks, what are the terms and conditions, requirements, 'terms' such as Margin, collateral security, flat rate, etc. used in the procedure in a simple manner.
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R.V.RAO

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R.V.RAO (Expert)
06 December 2007 FLAT RATE (OF INTEREST RATES) REFERS TO A SITUATION WHERE THE INTEREST IS NOT CHARGED ON REDUCING BALANCES OF THE LOAN OUTSTANDINGS.
BUT THE SAME RATE OF INTERST IS CHARGED FLAT ON THE LOAN OUTSTANDING BALANCES IRRESPECTIVE OF REPAID LOAN AMOUNTS.
OPPOSITE IS INTEREST CHARGED ON DIMINISHING BALANCES OF THE LOAN.
ANY RATE OF INT. CHARGED OR ANY METHOD IS SPCIFIC AS PER LOAN AGREEMENT SIGNED BETWEEN BORROWER AND LENDER.
AS REGARDS,LOAN TERMS AND CONDITIONS AND TERMINOLOGY OF LENDERS, MAY I SUGGEST
TO YOU TO KINDLY REFER IN OUR CA CLUB FORUM SHARED FILES AN ARTICLE WRITTEN BY MR. RAYAN ON BANK FINANCE( DT. 12 TH NOV 2007).
R.V.RAO
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