NEED TO KNOW: Difference between Marketed Interest rate and Effective Interest Rate (EIR)

• The Marketed Interest rate is a simple way of calculating your interest by taking the total interest payment and dividing it by your principal. The EIR actually measures how much you pay based on a reducing loan balance and has a compounding effect. Because of that, the EIR will be higher than the Marketed interest rate. 

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While there is no saying which is more accurate as it depends on the individual preferences, it is important to make sure you compare apples to apples. Do not make the mistake of comparing the marketed interest rate to EIR. 

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Now that we sorted that out, let’s walk you through a couple of bank promotions and we’ll do a quick summary of which is the best at the end.. Wait for it… 

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We will use Ah Boy who wants to borrow S$10,000 with a 5 year tenure for all examples.

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DBS Bank (3.88% p.a., EIR 7.28%)

First up, we have our very own local bank DBS! Its an online exclusive, all you have to do is to apply for DBS Personal Loan today with promo code “LENDP” and receive up to 2% unlimited cashback on your approved loan amount! On top of that, Lendingpot is giving away an additional $20 Grab Voucher if you apply via link here and use Promo Code “LENDP”.  Valid for loan amount of S$10,000 and above. This promo ends on 31st march 2023 so don’t dilly dally already lah, just chiong!

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How it works: If Ah Boy wants to take part in this promotion, he would fall under tier 1 and get a 1% cashback (S$100) + $20 Grab Voucher form Lendingpot. 

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Standard Chartered Bank (3.48% p.a., EIR 7.56%)

Next up, is Standard Chartered with their CashOne Personal Loan Cashback Promotion! Enjoy full cashback on the first 2 months interests upon approval.

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Additionally, New clients will get a S$100 cashback bringing the total cashback of up to S$3,100 depending on your approved loan amount Valid till 31st march 2023.

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How it works: Following the chart above, if Ah Boy wants to take part in this promotion, and is a new client, he will have a total cashback of approximately S$207.95 with the total interest cashback (installment 1 & 2) subjected to some change depending on actual interest charged in your statement. However, if Ah Boy is an existing  client he will only get a total cashback of approximately S$107.95.

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HSBC (4.00% p.a., EIR 7.50%)

Last but not least, we have HSBC, offering multiple ongoing promotions!

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Don’t know which bank to choose? Let us compare!

Let’s take the example of Ah Boy, who wants to borrow S$10,000 with a 5 year tenor to compare the loans between all three banks, with and without promotions to choose the best deal.

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Final Verdict

For those that are taking part in the promotion, and are a new customer of Standard Chartered Bank, taking their CashOne personal loan would be the cheapest option (S$11,731.25). However, if you are an existing customer of Standard Chartered, then HSBC’s personal loan with the online exclusive promotion offer (S$11,873) would be the cheapest option. 

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And finally, all premier HSBC customers should take their personal loans from HSBC as the special rates offered by HSBC would give them the best deal!!

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*All promos require a min loan amount of S$10,000 and a min tenor of 3 years. ‘

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What’s more apply via the SCB link below and get an additional 0.5% cashback from Lendingpot when you get approved. T&Cs apply.