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 ?
The discount interest rate is subject to deadline for submission of the questionnaire-application for a loan
With the participation of venture capital funds and other investors in a crisis situation the company will also result in a higher required rate of return, which is reflected in the next chapter, analyzing the discount interest rate in the valuation of the company in financial distress.
Initiating the debate, in their original tax model in 1958, MM used the unlevered equity rate to discount interest tax deductions and proposed relatively modest tax gains on debt interest; however, in 1963 MM overturned their earlier original tax model and proposed a tax correction model that discounted interest tax deductions at the riskless debt rate to yield very large debt tax gains.
The bank has also lowered its Lombard rate by 25 basis points to two percent but left its discount interest rate unchanged at 0.
However, they also use their third party claims administration firms and their investment managers to assist in the development of estimates of unallocated loss adjustment expenses and projecting conservative, yet realistic, discount interest rates.
The cuts came a day after Kuwait cut its key discount interest rate by 125 basic points, and the UAE reduced rates 50 basic points.
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.
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.
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.
QRAA is also delivering assistance on behalf of the Australian Government through the farm finance, drought concessional loans and drought recovery loans schemes which help with restructuring existing debt and carry-on finance at discount interest rates.