Loan
EIR
Also known as: Effective Annual Rate
Effective Interest Rate - True annual cost on a reducing-balance loan after fees.
Detailed Explanation
EIR (Effective Interest Rate) represents the actual annual cost of a loan on a reducing balance basis, factoring in compounding and certain fees. It differs from 'flat rate' quotes that apply the rate on the entire principal for the whole tenure and understate the real cost. Always compare EIRs across offers.