Effective annual rate

The effective annual rate expresses the total cost of a credit, the interest and the other costs, as a yearly percentage of the amount (KKG, Art. 5 and 6). Every lender works it out with the same formula set in the law (KKG, Art. 33), and your contract must state it (KKG, Art. 9).

The law leaves some costs out of it, such as optional insurance and the costs of a missed payment (KKG, Art. 34).

What it means for your loan

It is the fairest single figure for comparing offers for the same amount and term.

At Swizeo the interest rate is 3 % a year for every loan, and the effective annual rate beside it is about 3.04 %. It is a little above 3 % because you pay interest every month, not once a year.