The annual interest rate refers to the annual interest (one-year deposit rate). The so-called interest rate is the abbreviation of "interest rate", which refers to the ratio of interest amount to deposit principal or loan principal within a certain period of time.
The most essential difference between annualized rate and annual interest rate is that annualized rate is the handling fee to be paid, while annual interest rate is the yield of deposit or wealth management.
Annualized interest rate is a comparison of converting short-term interest rate into one year, which is more convenient and intuitive. For example, if you saved 1 0,000 yuan at the beginning of the year and the interest rate for half a year is 2%, you will get 1 0,020 yuan after half a year. If the half-year interest rate is 2% annualized, the annualized interest rate is 4%. Similarly, if the quarterly return rate is 3%, the annualized return rate is 12%.
Calculation formula of annualized rate: annualized rate = annual loan cost ÷ annual loan amount ×100%; Annualized rate = daily rate *365, annualized rate = monthly rate * 12.
The annualized interest rate usually appears in the loan, which usually means that the comprehensive cost of the loan is converted into the annual interest rate, which is also the embodiment of the borrowing cost.
All institutions engaged in loan business should show the annualized interest rate to borrowers in an obvious way when marketing through websites, mobile applications, posters and other channels.
Institutions engaged in loan business include, but are not limited to, deposit-taking financial institutions, auto finance companies, consumer finance companies, microfinance companies and Internet platforms that provide advertising or display platforms for loan business.
The annualized loan interest rate is calculated according to the ratio of all loan fees charged by the borrower to the actual loan principal, and converted into annualized form. The annualized loan interest rate can be calculated by compound interest or simple interest method: compound interest is calculated by internal rate of return; If the simple interest calculation method is adopted, it should be explained that it is simple interest.
On March 3, 20021March 3 1 day, the People's Bank of China issued an announcement to make relevant provisions on the annualized interest rate of loan products.