How is annual reducing balance different from monthly reducing balance?
In case of an annual reducing basis, the outstanding principal gets adjusted once a year while in the monthly reducing balance basis, the principal gets adjusted on a monthly basis. Hence, more of your principal gets repaid in monthly reducing basis than in annual basis. However, there are banks, which calculate EMI’s on a daily or a quarterly basis.
In an annual reducing basis, the outstanding principal gets adjusted once a year while in the monthly reducing balance; the principal gets adjusted on a monthly basis. Therefore, more of your principal gets repaid in monthly reducing basis than in annual basis. However, some banks, calculate EMI’s on a daily or a quarterly basis too.
