Effective Annual Interest Rate
Total cost of a loan per year as a percentage.
The effective annual interest rate expresses the annual total cost of a loan, including certain incidental costs, as a percentage. It is the most important figure for comparing loan offers because it captures more than the pure borrowing rate.
The relevant statutes
§ 6 PAngV
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Related terms
General explanation for self-help, not legal advice (RDG). Individual cases may differ: if in doubt, contact a consumer advice center or a lawyer.