Flat Rate To Effective Rate

While eir is the true economic cost of the loan that takes into account processing fees annual flat rate will also determine whether or not you can handle the monthly payment you need to make for the next 12 to 60 months depending on the tenor of your loan. Flat rate with a flat rate interest payments are calculated based on the original loan amount. Car loan below is a calculation for a 90 000 car loan at 2 5 interest per annum.

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Flat To Effective Interest Rate Calculator

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A flat interest rate is always a fixed percentage.

Flat rate to effective rate. Imagine you applied for a personal loan of rm100 000 at a flat interest rate of 5 p a. Flat interest rate vs effective interest rate. From the above illustration example we can see that flat interest rate is about 1 92 times more than an effective interest rate term. A flat rate is commonly used for car loans and personal term loans.

In this case you will be paying 5 interest every year on the rm100 000 loan that you ve taken. The flat interest rate is mostly used for personal and car loans. Depending on the loan tenure as a general rule of thumb flat interest rate terms are almost always about 2 times of effective interest rates. With a tenure of 10 years.

The monthly interest stays the same throughout even though your outstanding loan reduces over time. When evaluating a personal loan in singapore it s extremely important to consider both annual flat rate and effective interest rate. For a loan amount of 1 00 000 with a flat rate of 12 00 or reducing balance interest rate of 21 20 total interest payment during 3 years is 36 000. For a loan tenure of 3 years flat interest rate of 12 00 is approximately equals to 21 20 of reducing balance interest rate.