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What is the effective interest rate?

April 26, 2017effective Interest rate

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What is the effective interest rate?

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The Effective Interest Rate, commonly termed the effective rate of interest, is the interest cost of the loan, expressed as a simple annual percentage derived using the internal rate of return. For a one-year, two-year and three-year loan, the effective interest rate is at 9.99% p.a., 13.99 % p.a., and 15.99% p.a. respectively. For a four-year and five-year loan, the effective interest rate is at 13.60% p.a. and 15.19% p.a. respectively.