Interest is the added percentage to any loan you take out from the bank. There are two types of interest: fixed and reducing, which differs in the way the monthly installments are calculated. However, at the end of the day, the percentage is more or less the same.
In this case, the monthly installments will be pre-determined and will not change. When you come to take out the loan, the interest is calculated and then the total amount of the loan is divided by the term of the loan.
In this case, the installments differ according to the amount of money already paid off from the loan. It is calculated every month, and although the percentage remains the same, the amount of interest paid lessens as the outstanding balance is paid off.
In reducing interest, the installments differ according to the amount of money already paid off from the loan.