Question: What is a nominal loan?

Answer: A nominal loan is a term that is used to describe an interest rate. So there are several terms that can be used but when the term “nominal interest rate” is used, it is supposed to be quite straightforward. It basically means that if the nominal rate on a loan is 5%, then a borrower pays $5 for every $100 on the loan. An example of a different term would be the real interest rate would be the nominal rate minus the inflation rate. So it would be what the person actually pays taking inflation into account. But the nominal rate is supposed to be the most straightforward term used.

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