Annual effective interest rate

The annual effective interest rate is calculated as per the following formula:

where

i – annual percentage rate (APR)

A – loan principal

n – sequence number of the repayment

N – sequence number of the last repayment

Kn – amount of the “n” repayment

Dn – number of days from the disbursement date up to the date of the “n” payment

The annual percentage rate “i” may be calculated, if the other data of the equation are available from the loan agreement or another source.

Example 1:

Consumer loan terms:

Allocated amount - 600,000 AMD

Nominal Annual Interest Rate (fixed) - 22% on outstanding loan balance

Term - 24 months or 730 days

Repayment Method - Equal monthly repayments (annuity).

Loan Disbursement Fee - 6,000 AMD

Withdrawal Fee - 1,800 AMD

Monthly Service fee - 3,000 AMD

Start Date - February 12, 2019

First Payment Date - March 12, 2019

Annual Percentage Rate - 39%

Example 2:

Car loan terms:

The cost of the car - 4,950,000 AMD

Allocated amount - 3,300,000 AMD

Nominal Annual Interest Rate (fixed) - 18% on calculated loan balance

Term - 60 months or 1825 days

Repayment Method - Equal monthly repayments (annuity).

Evaluation fee - 7,000 AMD

Traffic Police registration fee - AMD 2,000,

CASCO insurance - 123,750 AMD

Loan Disbursement Fee - AMD 10,000,

Withdrawal Fee - 9,900 AMD,

Monthly Service Fee - 500 AMD

Start Date: February 15, 2019

First Payment Date - March 15, 2019

Annual effective interest rate - 33.29%