The implicit interest rate is the effective interest rate on a loan,
reflecting
the true cost of borrowing, It is also the calculated IRR
(internal rate of return) for the whole loan period from the loan
issuer's
prospect. The effective interest rate can be different
from your loan interest rate input above due to:
-
The higher the origination fees, the higher the
implicit loan rate will be.
-
A subsidized loan with a long grace period can
significantly reduce the implicit loan rate.