How should one compare the interest rate on different loans?

To understand the interest rate properly one has to ensure that the right figure is being compared.

The annual rate of interest is the most standard way to compare rates on different loans.

Lower rates attract the attention of borrowers as it makes the loan look cheaper.

Often the state interest rate is not annual but for a shorter duration.

The shorter duration rates need to be converted to an annual rate for ease of comparison.

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