The trap of the headline "rate"
Two lenders can both advertise "1.5% a month" and yet one loan costs far more than the other. The reason is how the rate is applied. The two you'll meet most are the flat rate and the APR (annual percentage rate) — and only one of them tells you the true cost.
Flat rate
A flat rate is charged on the original loan amount for the whole tenure, even as you pay the balance down. Because it ignores the fact that you owe less over time, the flat rate understates the real cost. A "1% flat" loan is effectively much more expensive than 1% sounds.
APR (annual percentage rate)
APR expresses the cost as a yearly percentage that accounts for how the balance reduces, and it usually folds in fees too. Because it's standardised, APR lets you compare two very different loans on a level playing field. When you see APR, you're closer to the truth.
A quick example
Imagine two lenders offering a similar-sounding rate on the same amount. The one quoting a flat rate can end up costing noticeably more than the one quoting an equivalent-looking APR, because the flat rate keeps charging on money you've already repaid. Same headline, different bill.
How DhanBoost keeps it honest
DhanBoost loans charge a simple 1% per day on the principal over your actual tenure, and — because it's a single-repayment, salary-linked loan — the Key Fact Statement shows you the exact rupee total you'll repay before you accept. Our calculator shows the same figure, including a representative APR, so you compare on total cost, not a headline.
The one habit to build
Whenever you compare loans, ignore the marketing rate and ask two questions: what's the APR, and what's the total rupee amount I'll repay? Those two numbers cut through almost every pricing trick.
This article is general information, not financial advice. Loans are offered by DhanBoost's RBI-registered NBFC partners; all rates and charges are set out in your Key Fact Statement before you accept an offer.