Effective Interest Rate (EIR) vs Flat Interest Rate
It is essential to take into account the flat price and effective rate of interest (EIR) when you compare signature loans. The rate that is flat the quantity you utilize to determine simply how much interest you borrowed from in the loan. As an example, invest the down a S$10,000 loan by having a 5% flat rate of interest and a 5-year tenure, you are necessary to spend S$500 in interest per year for the next 5 years.
EIR having said that, represents the genuine financial price of the loan and makes up processing charges along with your loan payment routine. Another essential distinction between the two kinds of interest levels is the fact that because borrowers don’t get to make use of the total quantity of the mortgage during its length, they find yourself dealing with an increased price than simply the flat price. Read More