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Simple English definitions for legal terms
stated interest rate
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A quick definition of stated interest rate:
Stated interest rate: This is the interest rate that is advertised or stated by a lender or financial institution. It is also known as the nominal rate. This rate does not take into account any additional fees or charges that may be associated with the loan or investment. It is important to understand the stated interest rate when comparing different loan or investment options.
A more thorough explanation:
STATED INTEREST RATE
The stated interest rate is the rate of interest that is advertised or agreed upon by the borrower and lender. It is also known as the nominal rate under interest rate.
Example 1: A bank offers a personal loan with a stated interest rate of 5%. This means that the borrower will have to pay 5% interest on the loan amount.
Example 2: A credit card company advertises a card with a stated interest rate of 18%. This means that if the cardholder carries a balance, they will be charged 18% interest on that balance.
The stated interest rate is the rate that is advertised or agreed upon by the borrower and lender. It is important to note that this rate may not be the same as the actual interest rate that the borrower ends up paying. This is because there may be additional fees or charges that are added to the loan or credit card balance. The examples illustrate how the stated interest rate is used in different financial products such as personal loans and credit cards.