Effective Interest Rate Calculator
Find the effective annual interest rate including fees and charges.
Tip: APR includes fees as well — always compare loans by APR, not by nominal rate.
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About this digital tool
The effective interest rate calculator (APR) shows the real annual cost of a loan once you include not only interest but also arrangement fees, maintenance charges and other costs. Enter the loan amount, the payment or nominal rate, the term and the fees, and the tool finds the annual rate that equates the amount received with all the payments you will make.
It is the fairest measure for comparing bank offers in Albania and Kosovo: two loans with the same nominal rate can have very different APRs. The result is an estimate and depends on the data you enter; for the official figure see the information sheet your bank gives you.
How to use
- Enter the loan amount and the nominal annual rate.
- Add the fees and charges (arrangement, maintenance, etc.).
- See the effective rate (APR) — this is the real, comparable cost.
Frequently asked questions
What is the difference between the nominal rate and the effective rate?
The nominal rate includes only interest. The APR also includes fees and charges — which is why it is always higher than the nominal rate.
Why is APR important?
Because two banks can have the same nominal rate but different fees. APR makes loans comparable — choose the one with the lower APR.
How is the effective interest rate calculated?
It is the annual rate that makes the present value of all payments (instalments, fees, charges) equal to the amount you actually received. The calculation requires iteration, so a tool like this is used.
Why is APR higher than the nominal rate?
Because it includes fees and charges, not just interest. The more extra costs there are, the bigger the gap between them.
Which rate should I compare between banks?
Compare the APR, not the nominal rate. Only it includes the full cost and lets you compare offers fairly.