face interest rate

Face Interest Rate

The interest rate listed on a loan agreement. The face interest rate may bear little relation to the interest actually paid because the face rate does not indicate how often interest compounds. The annual effective rate is a better measure of interest. However, for the sake of simplicity, some lenders may list the annual effective rate as the face interest rate. It should not be confused with the nominal interest rate.

face interest rate

The interest rate shown on the face of a promissory note and used to calculate the monthly payments on a loan. In order to help borrowers compare apples to apples when shopping for a lender,the federal Truth in Lending Act requires lenders to reveal an annual percentage rate which includes the “face interest rate” plus the value of some closing costs and prepaid expenses.

References in periodicals archive ?
AHIP's weighted average face interest rate improved during the quarter to 4.
BOSTON - Five banks have created a $125 million fund to refinance mortgage loans for New England borrowers who are keeping up with monthly payments but face interest rate increases that could eventually put them at risk of losing their homes.
Investors in fixed-income funds typically face interest rate risk because the value of outstanding bonds usually decreases when interest rates rise," said Art Zimmer, co-manager of the Senior Floating Rate Fund.
The shares are to have a face interest rate of 10% with semi annual interest payments to be made on June 30 and Dec.
Revenue has already warned if people choose to defer paying the tax they will face interest rates of 4% - for example if your only income is social welfare and you can't afford to pay.
People turning to payday loan firms can face interest rates of up to 4000 per cent and be hit with hidden charges such as high fees for reminder letters.
Greece's Deputy Finance Minister Philippos Sachinidis told Mega TV that Athens wanted the euro zone to "send the proper message to markets so that the next time Greece goes out to borrow in international markets it will face interest rates that price the Hellenic Republic in a better way.
The Council of Mortgage Lenders, the trade association for mortgage firms, was reported as saying homeowners could face interest rates of more than 10pc - an extra pounds 227.
If Britain joins, we face interest rates which bear no relation to the needs of our economy; centralised regulation which will inevitably add to the cost burden on business and make Britain less competitive; centralised taxation which can only mean higher taxes; and complete loss of control over our own fate.
BANK of England policymakers signalled yesterday that borrowers could face interest rates at 6 per cent this year.