Please note that specified in the loan agreement the interest rate - is not all of the costs incurred by the borrower, making out a loan.Therefore, the value of the effective interest rate is intended to indicate the potential client about the possible costs associated with servicing the debt on the loan.
is mandatory in calculating the effective interest rate takes into account repayments of principal, interest on the funds, the commission for the examination of the loan application, service and the opening of the loan account for the early repayment of principalloan.As well as the mandatory life insurance and health of the borrower and the mortgaged property, if defined in the loan agreement.
The effective interest rate al
so depends on the method of repayment (differentiated or annuity payments), the frequency of payment of the principal amount (at the end of the loan repayment period, monthly or quarterly) frequency of charging a commission (monthly or one-time).
During counseling the client about loan officer of the bank is obliged to provide full information on the calculation of interest.Also, it is possible to determine on their own with the help of the "Loan Calculator", where the fields are entered all the data of the credit transaction.
If possible take advantage of this program is not present, the interest rate can define yourself.This count will be less accurate, but still allow you to set the difference between real interest rate and statements.To do this, the monthly payment on the loan with interest to be multiplied by the entire loan term in months.That will have the amount that the borrower must repay the credit institution for the provision of funds.To it must be added the sum of all the insurance and commission.
Then, from the result, subtract the amount of the requested loan.As a result, you get the value of the overpayment for the entire loan term.If it is desired to divide the loan amount and multiply by 100, you define the desired value of the effective interest rate.