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Effective APR vs APR. Interest Rates


Ake109
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OK, so I guess most people already know how a car loan of 2% HP rate equals to easily over 5% APR over a few years.

 

But for mortgage loans in Singapore, the rate which the bank advertises, is the 'nominal' APR and not the effective APR correct?

 

e.g. I understand most banks use the 'daily rest' method to compound mortgages? (correct me if I am wrong, which banks here use monthly rest?).

 

So for a loan at nominal 5% APR but with daily compounding, it would say work out to about 5.13% effective APR.

 

Am I right to say the APR quoted by the banks here for mortgages is the nominal and not the effective APR? Is there any MAS rules that says we can ask for the effective APR from the banks?

Edited by Ake109
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I always thought it was an MAS rule for the banks to also advertise the effective interest rate (have seen it on all the adverts that I remember).

 

Even if it isn't a rule, you can just ask the banks for it when you speak to their mortgage specialist - why do you need MAS to mandate it if you already know what to look out for?

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