Effective Interest Rate (EIR) definition
Effective Interest Rate (EIR) means an annual rate of interest equal to the monthly compounding of the Nominal Interest Rate.
Effective Interest Rate (EIR) means the total cost of credit or return on deposit, stated as an annual rate of credit’s total value or deposit’s total return, and calculated according to the methodology presented in Article 4 and Annex 1 of this Regulation, by means of which discounted cash inflows are balanced against discounted cash outflows, which refer to credits granted or deposits received. In discounting, the actual (calendar) number of days in a month and a 365 / 366-day year are used.
Examples of Effective Interest Rate (EIR) in a sentence
The interest and Principal components of the MID vary each month and are computed as follows: • Interest component: Prior month’s outstanding Principal balance x monthly Effective Interest Rate (EIR), where monthly EIR = (1 + Annual EIR)1/12 – 1.
The Interest and principal components of the Monthly Installments Due vary each month and are computed as follows: • Interest component: Prior month’s outstanding principal balance x monthly Effective Interest Rate (EIR), where monthly EIR = (1 + Annual EIR) 1/12 – 1.