• CIMB Pulse
  • Banking With Us
  • Digital Services
  • Promotions
  • Help & Support
  • Quicklinks
Savings Strategies
Investing My Money
Travel Tips
Planning For My Future
Thinking About Insurance
Other Services
Latest Promotions
Rates & Charges
Download Center
Regulations & Policies
Security & Fraud

Why is the Interest rate (flat interest rate) different from the Effective Interest Rate?

The interest rate is used as reference to calculate the total interest payable on the loan on straight line basis, by assuming the loan principal is the same throughout the loan tenure.

Effective Interest Rate reflects the true cost of borrowing by taking into account the reducing principal balance over the loan tenure and any upfront processing fee charged. 

Hence, Effective Interest Rate is generally higher than flat interest rate. 

Looking for More Questions?