Monthly instalment loans usually increase the effective rate of borrowing by approximately 2 times the stated rate.

Question

Quizplus · Accepted Answer

This statement is generally true as monthly installment loans involve additional fees and interest that increase the overall cost of borrowing, resulting in an effective interest rate that is significantly higher than the stated rate. The actual increase in effective rate, however, can vary depending on a range of factors such as the loan amount, loan term, and the exact terms and conditions of the loan agreement.

Monthly Instalment Loans Usually Increase the Effective Rate of Borrowing