What's the difference between annual interest rate and monthly interest rate?
1, the conversion period is different.
The monthly interest rate refers to the percentage of interest and principal calculated every month, and the annual interest rate refers to the percentage of interest and principal calculated every year. Generally speaking, the annual interest rate is a few percent (%); And the monthly interest rate is a few thousandths (‰).
2. The monthly and annual interest rates of loans are calculated in different ways.
Annual interest rate: refers to the interest rate of one-year deposits or loans; Annual interest rate12 = monthly interest rate. The monthly interest rate refers to the one-month deposit or loan interest rate; Monthly interest rate × 12= annual interest rate. For example, the annual interest rate is 6%; The interest rate in Na Yue is 6%12 = 5%.
The conversion relationship between monthly interest rate and annual interest rate is: monthly interest rate = annual interest rate/12, and the corresponding annual interest rate can be calculated by monthly interest rate × 12.
For example, the monthly loan interest rate of a small loan company is 1.5%, and the corresponding annual interest rate is converted to1.5% ×12 =18%. In private lending, loan interest mostly refers to the monthly interest rate, such as the common monthly interest rate of 8% and the monthly interest rate of 1.5%. In fact, the corresponding monthly interest rates are 0.8% and 1.5% respectively, which translates into annual interest rates of 9.6% and 18%.
What are the influencing factors of annual interest rate?
1, central bank policy
Generally speaking, when the central bank expands the money supply, the total supply in loanable funds will increase, the supply exceeds demand, and the natural interest rate will decrease accordingly; On the contrary, the central bank implements a tight monetary policy, reducing the money supply, so that loanable funds's demand exceeds supply, and interest rates will rise accordingly.
2. Price level
Market interest rate is the sum of real interest rate and inflation rate. When the price level rises, the market interest rate also rises accordingly, otherwise the real interest rate may be negative. At the same time, due to rising prices, the public's willingness to deposit will decrease, while the loan demand of industrial and commercial enterprises will increase. The imbalance between deposit and loan caused by loan demand exceeding loan supply will inevitably lead to an increase in interest rates.