What is the annual interest rate？
The annual interest rate refers to the deposit interest rate for one year. Interest rate is the abbreviation of "interest rate", which refers to the ratio of interest amount to deposit principal or loan principal in a certain period. Usually divided into annual interest rate, monthly interest rate and daily interest rate. The annual interest rate is expressed as a percentage of the principal, the monthly interest rate as a percentage, and the daily interest rate as a percentage. When the economic development is in the growth stage, the investment opportunities of banks increase, the demand for financing funds increases and interest rates rise. On the contrary, when the economic development is depressed and the society is depressed, the willingness of banks to invest decreases, the demand for financing funds naturally decreases, and the market interest rate is generally low.
Calculation method of annual interest rate
On March 3, 20021March 3 1, the People's Bank of China issued an announcement stipulating the annualized interest rate of loan products. The annualized loan interest rate should calculate the ratio of the total loan cost received by the borrower to the actual loan principal and convert it into an annualized form. The annualized loan interest rate can be calculated by compound interest or simple interest method. The calculation method of compound interest is internal rate of return method; If the simple interest calculation method is adopted, the simple interest shall be explained.
All institutions engaged in loan business must show the annualized interest rate to borrowers in a clear way when marketing through websites, mobile apps, posters and other channels. Institutions engaged in financing business include deposit financial institutions, auto finance companies, consumer finance companies, small loan companies, and Internet platforms that provide advertising and display platforms for financing business, but are not limited to this.
Generally speaking, after the central bank expanded the money supply, the total supply in loanable funds increased, the supply exceeded demand, and the natural interest rate dropped. On the contrary, the central bank implemented a tight monetary policy, reduced the money supply, and did not seek loanable funds's supply, so interest rates rose.