Why is APR important?

• It helps consumers make informed decisions when comparing credit offers.
• It considers all credit costs, not just interest, allowing for a more accurate cost comparison.
• APR is a mandatory figure that must be included in the credit agreement.

APR reflects total costs:

• It includes interest, fees, and other costs associated with the credit.

Example APR calculation:

• Credit amount (principal): CZK 1,000,000
• Annual interest rate: 14%
• Repayment period: 2 years
• One-time fee: 3% of the credit amount (CZK 30,000)

Client's repayment schedule: The client pays only the annual interest; the principal is repaid in a lump sum at the end.

The APR of this credit is approximately 16.7%. This means that the total credit costs correspond to an annual rate of 16.7%, including all fees and the timing of payments.