How it is calculated
- Instalment = amount × r / (1 − (1 + r)−n), where r is the monthly interest rate and n the number of months (equal instalments).
- APR is the annual rate at which the present value of all payments equals the money you actually receive (the amount minus one-off fees). The calculator finds it numerically — hence “approximate”.
The EU rule. Consumer credit law requires the APR to be shown and calculated by one formula across the EU (Directive 2008/48/EC; from 20.11.2026 Directive (EU) 2023/2225, Article 30). From 20.11.2026 every Member State must also have measures that effectively prevent excessively high borrowing rates, APRs or total costs of credit, such as caps (Directive (EU) 2023/2225, Article 31(1)).
Example: Bulgaria. The APR may not be higher than five times the statutory interest on late payments; clauses above the cap are void (Consumer Credit Act, Article 19(4)–(5)).
Check in your country: does your country cap the APR or the total cost of credit, and how? Ask the lender for the SECCI form — it has the same structure in every EU country. Compare offers by APR and the total to repay, not by the instalment.
The terms in the Glossary
- APR (annual percentage rate of charge) — the APR is the total cost of a credit — interest, fees, commissions and compulsory insurance — expressed as one annual p
- Interest — interest is the price paid for using someone else's money — what a borrower pays a lender, or a bank pays a saver, for t
- Interest rate (borrowing rate) — the interest rate (borrowing rate) is the percentage at which interest is charged on the amount used over one year — fix
- Consumer credit — consumer credit is credit a private individual takes for personal needs, outside their trade or profession; it is protec
- Annuity repayment — an annuity repayment is an equal instalment over the whole term of a loan, in which interest makes up most of the paymen
- Principal — the principal is the amount you actually borrowed (or deposited) — without interest and fees; interest is charged on wha
- Early repayment — early repayment is paying back all or part of a loan before the agreed date; consumers have the right to do so at any ti
In depth in the modules
- Module 22 · Credit — types, annual percentage rate of charge (APR), mortgages, credit history
- Module 7 · Interest, compounding, capitalisation