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GXS Help Centre

What are Effective Interest Rate (EIR) and Annual Percentage Rate (APR) for my Instalment Loan?

The Annual Percentage Rate (APR) represents the total borrowing cost, expressed as a yearly rate, relative to the initial loan amount.

The Effective Interest Rate (EIR) is the rate that reflects the true cost of borrowing and takes into account total charges. It's computed over a reducing balance basis and accrued daily.

For example, if you took a loan of S$10,000 with a tenure of 3 years:

APR: 3% p.a.
EIR: 5.69% p.a.
Tenure: 3 years
Loan drawn: S$10,000

Total interest payable = Loan * APR * tenure
= S$10,000 * 3% * 3 years
= S$900

Monthly repayment amount = (interest payable + principal) / tenure
= (S$900 + S$10,000) / 36 months
= S$302.78

The interest payable component forms part of your repayment amount based on the interest accrued daily calculated using EIR and your outstanding principal balance.

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