In general, the effective rate of interest on a discount loan

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The effective rate of interest on a discount loan is higher than that on a standard loan. In a discount loan, the interest is deducted from the face value of the loan upfront, whereas in a standard loan, the interest is calculated based on the remaining principal each period. This means that the borrower only receives a portion of the loan upfront and must repay the entire amount plus interest at the end of the loan term. The effective rate of interest on a discount loan is therefore higher because the borrower is paying interest on the full amount while only receiving a portion upfront.

In General, the Effective Rate of Interest on a Discount