The loan interest is calculated based on the nominal interest rate, and the annual percentage rate represents the total cost of borrowing in case of due payment of interest and other charges thereof.  

 

The annual percentage rate is calculated by the following formula:

 

where:

 

i – annual percentage rate (APR)

A – loan amount (the initial loan amount issued by the creditor)

n – current installment number

N – last installment number

Kn - n^th installment amount

Dn - period from the date of loan issuance to the date of the n^th installment (expressed in days)

 

 

Example:

Loan amount – AMD 1,000,000

Nominal annual interest rate - 16%

Maturity – 60 months

Loan repayment order – annuity (monthly equal installments)

Application screening fee - AMD 5,000

 

In this case, the monthly loan installment will amount to AMD 24,318 at the annual percentage rate of 17.46%.