Effective interest rate calculator
The effective annual rate shows what a nominal rate really costs over a year when interest is charged more than once: each charge adds to the balance the next is taken from, so it always exceeds the nominal rate.
- Difference from nominal
- 0.683%
Rates and thresholds
- Nominal 12%, compounded annually
- 12%
- Nominal 12%, compounded semi-annually
- 12.36%
- Nominal 12%, compounded quarterly
- 12.551%
- Nominal 12%, compounded monthly
- 12.683%
- Nominal 12%, compounded daily
- 12.747%
What is krediidi kulukuse määr, Estonia's APRC?
Estonia's APRC — krediidi kulukuse määr, or KKM, on every loan offer — is the loan's real yearly cost as a percentage. Besides interest it folds in the contract fee, account fees, compulsory insurance and any other charge you cannot avoid. Compare offers by that number: the advertised interest rate leaves the fees out and makes the loan look cheaper than it is.
Why is the effective rate higher than the nominal one?
The nominal rate is the percentage agreed for a year; the effective rate also counts how often interest is charged. A nominal 12% comes to 12.551% with quarterly compounding, 12.683% with monthly and 12.747% with daily. The gap widens as the rate itself rises: 20% compounded monthly really costs 21.939%.
How should I compare loan offers?
Compare the APRC, not the advertised interest rate, and compare like for like: the same amount over the same term — a longer term lowers the monthly payment but raises the total cost. Check whether the contract fee is paid separately or added to the principal, because in the second case you pay interest on it for the whole term. The APRC assumes the schedule is followed exactly.
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