EIR (effective interest rate)

EIR (effective interest rate) — the true annual rate of a loan or deposit once compounding and quoting tricks are unwound. A loan quoted “1.5% monthly add-on” is far more expensive than 18%/yr once computed properly. PH regulators require lenders to disclose EIR; reduce every rate to EIR before comparing anything to anything.

First used in: 1.1 · The two hurdles: benchmarking math I