In the case of repayment of loans by installments, banks should add the interest calculated according to the nominal interest rate to the loan principal, calculate the sum of the loan principal and interest, and require enterprises to repay the sum of the principal and interest by installments during the loan period.
Due to the installment repayment of the loan, the borrowing enterprise actually used only half of the loan principal on average, but paid the full interest. In this way, the real interest rate borne by the enterprise is about 1 times higher than the nominal interest rate.
For example:
An enterprise borrows 20,000 yuan, with the annual interest rate of 12%, and repays the principal and interest in 12 months. Because of the equal repayment, the borrower's funds at the beginning of the year were 20,000 yuan, which decreased evenly throughout the year, and at the end of the year, it was 0, and the borrower's funds held throughout the year were (20,000 +0)/2.
If the interest on available funds is not considered, the actual interest rate of the loan is = (20000×12%)/(20000/2) = 24%.
Extended data:
Generally speaking, the impact of raising interest rates includes:
1, the stock market is depressed (the stock market is down, but there is also a slight upward trend)
It is possible to alleviate inflation by reducing the speed of money circulation.
People spend less and save more.
4. Industrial and commercial enterprises reduce investment.
5. Stimulate the appreciation of domestic or local currencies.
6. Slow down national or local economic growth.
Special circumstances:
1, inflation is aggravated by the emergence of liquidity trap.
2. If there is structural imbalance in the economy, then there will be more serious inflation, which is mainly manifested in the fact that the market price of consumer goods does not fall while the asset price soars.
3. The existence of compulsory foreign exchange settlement and sale system may aggravate the inflow of short-term speculative capital and increase the money supply.
Baidu Encyclopedia-Interest Rate Raising Method