How to Calculate Flat Rate to EIR in Singapore: A Step-by-Step Guide
Converts an advertised flat interest rate into the equivalent effective interest rate.
Interest rates, instalments and returns compound over years, so a small difference in rate or tenure turns into thousands of dollars. Working the numbers out yourself makes it easier to compare bank offers, avoid expensive debt and plan savings goals.
What you need
- Flat rate (% a year)
- Term (years)
Step by step
- Enter the flat rate (% a year).
- Enter the term (years).
- The results update as you type, or press Calculate.
- Read the effective interest rate first, then the supporting figures below it.
The formula
EIR is the rate that makes the present value of the instalments equal the loan.
Worked example
For example, with these inputs:
- Flat rate (% a year): 3
- Term (years): 5
the calculator returns:
- Effective interest rate: 5.64%
A second example
Now change the inputs to:
- Flat rate (% a year): 3.75
- Term (years): 5
the calculator returns:
- Effective interest rate: 6.98%
Practical tips
- Paying credit card bills in full avoids interest charges of around 27% a year or more.
- Even small monthly contributions grow meaningfully over 20 years because of compounding.
- Keep three to six months of expenses in an easy-access account before investing aggressively.
- Car loans are capped at seven years, and interest is charged on the original amount for the whole term.
Background
Inflation erodes buying power, so a savings goal set in today's dollars needs to be adjusted upwards for the years it will take to reach it. Singapore's core inflation has varied widely over the past decade, so it is worth testing a range of rates.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
Interest in Singapore is quoted in several ways. Mortgages and savings accounts use effective annual rates, while car loans and many personal loans are advertised at flat rates that look much lower than their true cost. Banks must disclose the effective interest rate, and comparing on that basis gives a fair picture.
Related calculations
- Split the Bill Calculator: Splits a bill evenly.
- Credit Card Payoff Calculator: Shows how long a card balance takes to clear at a fixed payment.
- Retirement Savings Calculator: Projects retirement savings outside CPF.
- Emergency Fund Calculator: Sets a target for your rainy-day savings.
Want to skip the arithmetic? The free Flat Rate to EIR Converter does all of this instantly and updates as you type.
Run your own numbers: Flat Rate to EIR Converter