Difference between IIR and FOIR

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IIR stands for Internal Interest Rate while FOIR stands for Fixed Obligation to Income Ratio.

IIR is the interest rate set by the bank for a particular loan or credit product.
FOIR is the ratio of fixed obligations to the borrower's income, used to determine their loan eligibility.
IIR is specific to the financial institution's policies and can vary between different lenders.
FOIR is a standardized calculation used by lenders to assess the borrower's ability to repay the loan.
For example, if a bank sets an IIR of 10% for a personal loan, it means the borrower will pay 10% interest on the loan amount.
If a borrower has a FOIR of 50%, it means that 50% of their income is already committed to fixed obligations like existing loans or rent.

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