Difference between the monthly flat rate and the annualized percentage rate (APR)

Monthly flat rate is to calculate the monthly repayment amount for an instalment loan, which can be illustrated in the example below

Example:

Loan Amount = HK$60,000

Monthly flat rate = 0.50%

Repayment period = 24 months

Total interest = HK$60,000 x 0.50% x 24 = HK$7,200

Monthly Repayment Amount = (HK$60,000 + HK$7,200) / 24 = HK$2,800

The annualized percentage rate (“APR”) is calculated in accordance with the guideline issued in respect of the Code of Banking Practice and is rounded to the nearest two decimal places. An APR is a reference rate, which includes all applicable interest rates, fees and charges of the product, expressed as an annualized rate.

To borrow or not to borrow? Borrow only if you can repay !