Discount Interest

Discount Interest

Interest at a beginning of the loan. For example if you take out a one-year loan of $100 at a discount interest rate of 10%, you would receive $90 at the outset.

Discount Interest

1. A situation where all the interest on a loan is paid at once. That is, the interest is deducted from the amount the borrower receives at the beginning of the loan. For example, if a bank makes a loan of $20,000 at a simple interest rate (that is, a non-compounding rate) of 5%, the bank simply does not give the borrower $1,000 (or 5% of $20,000). The borrower effectively borrows $19,000 and repays it with no interest. Discount interest is very rare in retail banking.

2. See: Discount rate.
References in periodicals archive ?
Mortgage providers in the country are expected to phase out 12-month introductory discount interest rate loans because of the credit crisis.
Non-GAAP adjusted net income and non-GAAP adjusted earnings per diluted share, as we present them in the financial data included in this press release, have been adjusted to exclude the effects of income and expenses for the valuation of warrants and the related subordinated debt discount interest expense.
When implemented, the NADA program documents those instances when dealers discount interest rates and ensures the discounts are for legitimate business reasons, like meeting a competitive finance offer.
There is significant consensus in both the House and the Senate that the discount interest rate applied to airlines should be more fairly equalized.
This model incorporates time-varying discount interest rates and forward-looking earnings forecasts from sell-side research.
Among other things, these opinions dealt with the defeasance of the original lien, the original issue discount interest on the refunded bonds not being subject to federal tax, certain bankruptcy preference and automatic stay issues, and the permissiveness of the contemplated transaction.
Yet another is setting the federal funds discount interest rate, also known as the overnight rate--the rate at which Fed branch banks loan money to each other (generally overnight).
Despite fears that the 25 basis points discount interest rates hike imposed recently by GCC central banks will have a dampening effect on asset prices in regional stock markets, this part of the world is set for another year of strong GDP growth in 2004 into 2005 thanks largely to the buoyant oil prices.
Do not, however, discount interest from Celtic, where boss Tommy Burns is determined to build a Fort Knox defence.
DUBAI: Kuwait slashed its key discount interest rate by 125 basis points yesterday while the UAE cut by a more modest amount, tracking a round of emergency rate cuts by major central banks.
Mr Archer added: "Accelerating service sector activity in August, and still robust new business growth, indicate that it is premature to discount interest rates reaching six per cent before the end of the year.
Meanwhile, Kuwait slashed its key discount interest rate by 125 basis points yesterday while the United Arab Emirates cut by a more modest amount, tracking a round of emergency rate cuts by major central banks.