Legal Definitions - stated interest rate

The stated interest rate refers to the specific interest rate that is explicitly written, advertised, or formally declared on a financial product, such as a loan, savings account, or bond. It is the headline rate presented to the consumer or investor, before considering any additional fees, compounding effects, or the impact of inflation. Essentially, it's the rate you see "on paper" or "in the contract."

• Example 1: Car Loan Advertisement
  A car dealership advertises a special financing offer for a new sedan at an interest rate of 3.5% per year. This 3.5% is the stated interest rate because it is the explicit, advertised rate that the borrower will see and agree to when taking out the loan. It's the rate formally presented in the financing agreement.

• Example 2: Savings Account Promotion
  A bank promotes a new high-yield savings account, promising an annual interest rate of 0.80%. The 0.80% is the stated interest rate. It's the rate the bank publicly declares it will pay on deposits, clearly communicated to potential customers through their marketing materials and account terms.

• Example 3: Mortgage Offer Letter
  When a person applies for a home loan, they receive an offer letter from the lender detailing a fixed interest rate of 6.25% for a 30-year mortgage. This 6.25% is the stated interest rate. It is the specific rate formally presented in the loan documents that the borrower will be charged on the principal amount of their mortgage.