Flat Rate to EIR Converter
Converts an advertised flat interest rate into the equivalent effective interest rate.
Result
- Effective interest rate
- 5.64%
How to use the flat rate to eir converter
- 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.
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%
Background
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.
Calculators make it easy to compare scenarios side by side: a shorter tenure versus a lower instalment, a higher deposit versus more cash in hand, or paying down debt versus investing. Seeing the total cost, not just the monthly figure, usually makes the better choice obvious.
Frequently asked questions
How does the flat rate to eir converter work?
It applies this formula: EIR is the rate that makes the present value of the instalments equal the loan.
Is this financial advice?
No. It is a calculation tool. For decisions about loans or investments, compare official offer documents and consider speaking to a licensed adviser.