Conversion of Flat Interest to Effective Rate Calculator
The Conversion of Flat Interest to Effective Rate Calculator estimates a loan and interest estimate for your scenario from the quantities, rates, period, units and other assumptions requested on the page. Replace the example values with your own conversion flat interest effective rate figures and recalculate after changing an assumption. Use it to compare scenarios, then verify any current rate or fee before acting.
Loan ads often show flat rates that look low, but the real cost is EIR. Use this tool to convert to compare loan offers correctly.
Calculation results
EIR per year (effective interest)
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EIR per month
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Specific Flat Rate
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EIR higher than Flat
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Example: Loan 100,000 baht
A month's worth.-
Total Interest-
Total payments-
Number of instalments-
Summary: Flat Rate - Per year, equal to EIR. - per year — borrowers pay real interest higher than advertised.
Why do you need to know the EIR before you borrow?
In Thailand, car loans and personal loans are often advertised as flat rates, which make the interest rate look lower than it really is. For example, flat rate 10% per year, repayment 48 month, actually there is EIR about 18-19% per year.
Comparison chart of common flat vs EIR
Flat Rate (per year)
EIR 24 month
EIR 36 month
EIR 48 month
EIR 60 month
5%
9.1%
9.2%
9.2%
9.3%
10%
17.9%
18.2%
18.5%
18.7%
15%
26.4%
27.0%
27.4%
27.7%
20%
34.6%
35.5%
36.2%
36.7%
How to calculate EIR (Newton-Raphson)
Knowing the PMT from Flat Rate, find a monthly rate r that satisfies the following equation:
P = PMT × [1 − (1+r)^(−n)] ÷ r
The annual EIR is then = ((1+r)^12 − 1) × 100.
Frequently asked questions
What's the difference between flat rate and effective rate?
Flat Rate calculates interest from the full principal amount for the duration of the contract, making it seem low, but the Effective Rate (EIR) is the real cost because it is calculated from the principal decreased in each period. Typically, EIR ≈ Flat Rate × 1.8 to 2 times.
Why is EIR important to Thai consumers?
The Bank of Thailand requires financial institutions to provide borrowers with EIRs, but advertising often emphasizes flat rates that appear lower. Knowing EIRs helps to compare loan offers from different institutions fairly.
Flat 1% per month, how much is EIR?
Flat 1% per month (12% per year) for a loan of 48 per month equals EIR approximately 21-22% per year. The longer the term, the higher the EIR/Flat ratio.
How to calculate the conversion of flat to EIR? What is the formula?
Using the Newton-Raphson method, find the monthly rate r so that P = PMT × [1-(1+r)^-n] / r by calculating PMT from the Flat Rate and find the Annual EIR = ((1+r)^12 - 1) × 100
What is compound interest?
Interest calculated from principal plus accumulated interest makes money grow faster than ordinary interest. Formula: A = P(1+r/n)^(nt) where P=principal, r=interest rate, n=multiplications per year, t=number of years
What is the rule 72 used to calculate?
Use an estimate of the number of years that money will increase in 2 times: Number of years = 72 ÷ interest rate. For example, interest 6% per year money will be 2 times in 72÷6 = 12 years A simple rule for financial planning
What is the current interest rate on savings deposits in Thailand?
General savings are at 0.5-1.0% per year Regular deposits are at 12 months at 1.5-2.5% per year Special savings accounts are at 1.5-3% Check current rate from Bank of Thailand bot. or. th
Is interest on deposits taxable?
Yes, interest on bank deposits is tax deductible at the point of payment 15% by the bank except interest on savings deposits not exceeding 20,000 baht per year combined on all accounts can be claimed back or credited with tax at the end of the year.
Check before using results
Summary before deciding
This calculation result is suitable for preliminary planning. Actual figures should be checked from documents or official sources before making important decisions.
The calculation is based on the information you enter on this page.
Special cases may require additional information.
It is recommended to record or compare the results with the related tools below.
Disclaimer: The results of the calculation are mathematical estimates. The actual EIR may vary depending on fees and loan terms. It is not financial advice.
English calculator guide
How to use the Conversion of Flat Interest to Effective Rate Calculator
Use this page to test a specific conversion flat interest effective rate scenario. Enter your own values in the calculator above, review the units beside each field, and recalculate after changing an assumption. The result updates the conversion of flat interest to effective rate estimate instead of relying on a generic example.
Build a baseline conversion flat interest effective rate case with figures that match your situation.
Run a second conversion flat interest effective rate case after changing the rate, period, quantity or other key assumption.
Record the difference between the two conversion flat interest effective rate results and the input responsible for it.
Inputs for the conversion flat interest effective rate estimate
For this conversion flat interest effective rate calculation, check the quantities, rates, period, units and other assumptions requested on the page. The result is designed to show a loan and interest estimate for your scenario, not a guaranteed provider price or official decision.
How the conversion flat interest effective rate result is calculated
The calculator models principal, interest, repayment timing and term using the assumptions shown on the page. Reusing the same conversion flat interest effective rate inputs will produce the same estimate, which makes the page suitable for controlled scenario comparisons.
Checks for a conversion flat interest effective rate decision
Confirm any current rate, threshold or provider rule that could change the final amount. For conversion flat interest effective rate, Use the result to compare affordability, not as a lending offer. Check the lender’s effective rate, fees, insurance, payment schedule and approval conditions before committing. Check the important inputs and any current provider or authority rules before using the result for a decision.
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