Singapore Flat Rate vs EIR Calculator 2026 — Convert Any Bank’s Flat Rate to True Effective Interest Rate, See the 1.85× Multiplier Across Tenures, Compare Two Singapore Loan Offers by Real EIR Cost

Flat rate: interest is calculated on the original loan principal for the entire tenure, regardless of repayment progress. Monthly interest = Principal × Flat Rate / 12. This rate is the same in month 1 and month 36, even though you owe less by month 36. EIR (Effective Interest Rate): also called reducing balance rate, interest is calculated on the outstanding balance at each month, which decreases as you repay. The EIR is the true annual cost of the loan. Because the flat rate doesn’t account for the declining balance, it is always lower than the EIR for the same loan. The EIR is typically ≈1.85× the flat rate for 3-year Singapore personal loans. MAS requires EIR disclosure precisely because flat rate understates the true cost.

Singapore banks advertise flat rates because the flat rate is always a lower number than the EIR — it looks more attractive to consumers. A “3.5% flat rate” loan sounds cheaper than “6.5% EIR” even though both describe the identical loan with identical monthly payments and total interest. Banks are legally required by MAS to disclose EIR, but are not prohibited from featuring the flat rate more prominently. This is common practice not just in Singapore but across many Asian markets including Malaysia, Hong Kong, and the Philippines. As a borrower, always look for the EIR disclosure in the loan documentation — it is the only number that allows fair comparison between different banks and loan products.

The precise conversion requires solving the loan amortisation equation for the reducing balance rate. Step 1: Calculate the monthly payment using the flat rate: Monthly Payment = (Principal + Principal × Flat Rate × Years) / Months. Step 2: Use this monthly payment in the EIR equation: Monthly Payment = Principal × r(1+r)^n / ((1+r)^n – 1) where r = monthly EIR = Annual EIR/12 and n = months. Step 3: Solve for r using Newton’s method (iterative calculation). Annual EIR = r × 12. This calculator uses Newton’s method for precision. The commonly used approximation “EIR ≈ flat × 1.85” is only accurate to within ≈0.5% for standard 3-year loans and becomes less accurate for other tenures.

The EIR multiplier (EIR ÷ flat rate) is not constant — it increases slightly with tenure. For a 3.5% flat rate: 1-year loan → EIR ≈ 6.27% (multiplier 1.79×); 3-year → EIR ≈ 6.52% (1.86×); 5-year → EIR ≈ 6.59% (1.88×); 7-year → EIR ≈ 6.63% (1.89×). This is because the EIR formula weights interest payments against the declining outstanding balance. For longer-tenure loans, the early periods (when the outstanding balance is high) make up a larger proportion of the total loan life, causing the EIR to be slightly higher relative to the flat rate. In practical terms, the difference is small (about 0.4% EIR between 1-year and 7-year), but it means “flat × 1.85” is not universally accurate.

Yes — MAS Notice 632 (Unsecured Credit Facilities) requires Singapore banks to disclose the EIR in all loan advertisements and documentation. The EIR must be shown alongside or near the flat rate. However, the regulation does not specify that EIR must be in the same font size or as prominently placed as the flat rate. In practice, most Singapore bank loan advertisements show the flat rate in large print (e.g., “From 3.5% p.a.”) with the EIR in smaller text (e.g., “EIR: from 6.52% p.a.”). Look for the EIR disclosure in small print on all Singapore bank personal loan marketing materials. If a lender does not disclose EIR, they may not be a licensed Singapore bank or financial institution — verify their status on the MAS Financial Institutions Directory.

A processing fee increases the true EIR beyond the headline rate because you pay back more than you received. If you borrow S$30,000 with a 2% processing fee, you receive S$29,400 (net disbursement) but make monthly payments calculated on S$30,000 (full principal). True EIR = solve for the rate where S$29,400 (received) = present value of all monthly payments. This is higher than the nominal EIR calculated without fee. Example: 3.5% flat, 3 years → nominal EIR 6.52%. With 2% fee: true EIR 7.08%. The processing fee effectively adds approximately 0.25–0.60% to the EIR depending on fee size and tenure. Always include processing fees when comparing Singapore loan offers — a lower flat rate with a high fee can be more expensive than a higher flat rate with no fee.

Always choose based on EIR (including processing fees) — flat rate comparisons are inherently misleading and can lead to choosing the more expensive option. Two practical examples: Offer A: 3.5% flat, 5 years, no fee → EIR 6.59%. Offer B: 3.2% flat, 5 years, 1.5% fee → true EIR 6.49%. Despite higher flat rate, Offer A might actually have lower true cost at some loan amounts. Offer C: 3.0% flat, 3 years, 3% fee → true EIR 6.38%. Offer D: 3.5% flat, 3 years, no fee → true EIR 6.52%. Lower flat rate (C) but higher fee doesn’t always win. The “Compare Two Offers” mode in this calculator calculates true EIR for both offers including fees, giving a definitive answer.

Singapore personal loan EIR: typically 5.5%–13% per annum (reducing balance). Singapore credit card revolving interest: 24%–28% per annum (compounded monthly on outstanding balance). If you carry a credit card balance in Singapore and don’t pay it off in full each month, you pay 24–28% EIR — significantly more expensive than a personal loan at 6–7% EIR. Converting credit card debt to a personal loan can save 17–21% per annum in interest. However: credit cards have flexibility (minimum payment, 0% IPP for specific purchases); personal loans require fixed monthly payments over the full tenure. For planned large purchases where you need time to repay: a personal loan at 6% EIR is much cheaper than revolving credit card debt at 26% EIR.

Yes — Singapore licensed moneylenders regulated under the Moneylenders Act are required by the Ministry of Law to disclose the effective interest rate. However, the MAS 4% per month interest cap on moneylender loans already implies an EIR of approximately 48% per annum — significantly higher than bank personal loans. MAS regulates banks and finance companies; the Ministry of Law regulates licensed moneylenders (different regulatory bodies). The interest structure of moneylender loans may differ from bank loans — the 4% is the maximum monthly interest on the outstanding principal. Unlicensed moneylenders (loan sharks) are illegal in Singapore and have no interest caps. Always verify a moneylender’s licence at the Ministry of Law’s registry before borrowing. See our Licensed Moneylender Calculator for the true cost comparison.

For a reducing balance (EIR) loan: each monthly payment consists of: (1) interest on the remaining outstanding balance; (2) principal repayment. Month 1 interest = Outstanding Balance × (EIR/12). After payment, outstanding balance decreases. Month 2 interest is lower (smaller balance). This continues until the balance reaches zero at the final payment. The formula for monthly payment given EIR: Monthly Payment = Principal × [r(1+r)^n] / [(1+r)^n − 1] where r = EIR/12 (monthly rate) and n = total months. The total interest paid decreases with each period. In contrast, flat rate loans have the same interest charge each month regardless of the declining balance — hence the flat rate’s misleadingly lower number.

Approximate EIR ranges for major Singapore banks in 2026 (3-year loans at promotional rates): DBS/POSB: 5.43%–6.52% EIR (flat 2.88%–3.5%); OCBC: 5.62%–7.44% EIR (flat 3.0%–3.99%); UOB: 5.43%–8.37% EIR (flat 2.88%–4.5%); Standard Chartered CashOne: 6.52%–9.29% EIR (flat 3.5%–5.0%). Note: Promotional EIR rates are typically available for new-to-bank customers, salary crediting, or limited-time offers. Standard rates without promotions are higher. Always get a personalized quote and confirm the EIR before signing — rates shown in advertisements may not reflect your actual offer based on credit score and income.

Yes — EIR is the correct comparison metric across ALL loan products including balance transfers. Singapore credit card balance transfer offers: some banks offer 0% balance transfer for a promotional period (e.g. 0% for 12 months) but with a processing fee (typically 1%–3%). The true EIR of a “0% balance transfer with 2% fee over 12 months” = 2% ÷ 0.5 months average × 12 ≈ 4.8% EIR (approximate). If the balance transfer has a processing fee and reverts to the regular rate after the promotional period, you must factor in what happens to any unpaid balance. For debt that you can definitively repay within the 0% period: 0% balance transfer (even with fee) is usually cheaper than a personal loan at 6% EIR. For debt you cannot repay within the promotional period: a personal loan at fixed 6% EIR is typically cheaper than a revolving balance transfer that reverts to 24%–28%.

For a given loan amount, flat rate, and tenure, the monthly payment amount is unique — both the flat rate formula and the EIR formula give the same monthly payment number. This is because they are two different ways of expressing the same reality. The flat rate formula: Monthly = (Principal + Principal × Flat Rate × Years) / Months. The EIR formula: Monthly = Principal × [r(1+r)^n] / [(1+r)^n − 1]. These two formulas give the same result because the EIR is derived from the flat rate payment. The monthly payment doesn’t change — what changes is the percentage used to represent the interest cost. Flat rate understates the true annual cost; EIR accurately represents it. When comparing two loans, if the monthly payments are different, use total repayment or EIR — not the flat rate — to determine which is cheaper.

The most commonly used quick approximation: EIR ≈ Flat Rate × 1.85 (for 3-year loans). Other approximations: 1-year loan: EIR ≈ Flat × 1.78; 2-year: ≈ Flat × 1.82; 3-year: ≈ Flat × 1.86; 5-year: ≈ Flat × 1.88; 7-year: ≈ Flat × 1.89. Example shortcuts: 3.5% flat 3-year → ≈ 6.5% EIR; 4.0% flat 3-year → ≈ 7.4% EIR. These approximations are accurate within ±0.3–0.5% for most standard personal loans. However, when processing fees are involved, these simple multipliers no longer apply — you need the full EIR formula. For financial decisions above S$5,000, use this calculator rather than approximations — the precision matters when determining which loan offer is genuinely cheaper.

You can verify any bank’s advertised EIR using this calculator. Enter the advertised flat rate and loan tenure in the “Flat Rate → EIR Converter” mode — the calculated EIR should match the bank’s disclosed EIR within ±0.1%. If there is a significant discrepancy, the bank may be quoting EIR on the net disbursed amount (after fees) rather than the gross principal — which would make their EIR appear lower. Ask the bank to clarify: Is the EIR calculated on the full loan amount or the net disbursed amount? Under MAS guidance, EIR should be calculated on the amount effectively disbursed to the borrower (net of fees). A bank quoting EIR on the gross amount (before fees) is not following best practice disclosure. If you find a discrepancy, ask the bank to provide a full loan amortisation schedule confirming the EIR.

SOR (Singapore Dollar Swap Offer Rate) and SORA (Singapore Overnight Rate Average) are benchmark interest rates used primarily for variable-rate commercial and mortgage loans in Singapore — not personal loans. Standard Singapore personal loans use FIXED flat rates (and corresponding fixed EIR) for the entire loan tenure. The monthly payment is fixed regardless of what happens to SORA or other benchmark rates during the loan period. If you see a personal loan described as “floating rate” or “SORA-linked,” it is very unusual for Singapore consumer personal loans — most are fixed flat rate products. Variable-rate products exist mainly for mortgages and commercial lending. For the purposes of this Flat Rate vs EIR calculator, all calculations assume a fixed rate personal loan as standard in the Singapore market.