Bank Says 6%... The Reality Is 11.2%
Why 6% Is Not Really 6%?
When a bank advertises "6% annual interest" it is not technically lying. But it carefully selects what to show you. The 6% is calculated on the full original balance throughout the entire loan term. But your balance decreases with every monthly payment.
APR vs IRR โ The Real Difference
APR: What the bank advertises โ calculated on the original balance.
True IRR: The actual cost โ accounts for the decreasing balance. Always higher.
Real Example With Numbers
- Loan: 100,000 x 48 months x APR 6%
- Monthly payment: 2,348
- Total you will pay: 112,704
- True IRR: 11.2% annually โ not 6%
5 Tricks Banks Use
1. Monthly payment focus โ hides the true total.
2. Term extension โ lowers payment but interest doubles.
3. Administrative fees โ added to loan and interest charged on them.
4. Mandatory insurance โ raises the true cost.
5. Emotional marketing โ bypasses rational thinking.
The Solution with Kashf
Kashf by Axiom Zones calculates the true IRR of any loan in seconds โ free. Enter amount, term, and advertised APR to get: True IRR, Beautification Score 0-100, 9-bank comparison, and Islamic alternative.