FIND MORE DETAILS ABOUT AER!

What is "AER" (Annual Effective Rate)

When we talk about loans and choosing the best offer, you must take into account the "AER" (Annual Effective Rate).

"AER" is applicable to all credit products: consumer, mortgage or credit cards.

This indicator shows how much a loan will cost you when you pay it back to the bank. Yes, the total cost of the loan is not only the interest rate, but also other fees and commissions charged by the banks.

So, it is essential not to confuse the two notions – the interest rate is used to calculate the interest of a loan, and the "AER" is the indicator that includes all the payments we make for a loan, expressed as a percentage.

"AER" comes to your aid when you want to compare two loans and guides you to make the right choice.

What is included in the "AER" calculation

• Annual interest rate;
• Monthly administration fee;
• Credit release commission;
• Credit file analysis commission;
• Insurance fees.

          However, there are some additional costs that are not included in the "AER" calculation:

• early repayment fee;
• late payment penalties;
• notarial costs;
• property evaluation costs.
  
  

What criteria to take into account when calculating "AER"

It is not necessary to get complicated with calculations, because you can access online credit calculators, which will also indicate the "AER" rate, EXIMBANK also has one. Accordingly, if you want to choose a loan with lower costs, choose the one with the lowest "AER" rate.

In addition to fees, the value of the "AER" is also influenced by the repayment period of the loan.

For example: for a consumer loan of 100,000 lei, the "AER" value will be percentageally lower if the repayment period is 5 years, compared to the situation where you borrow the same amount for 3 years. This is because those costs with fixed values, regardless of the amount of the loan (analysis fee, release fee, etc.) will be spread over a shorter period of time.

Thus, when you analyze several credit offers, you must also take into account the period for which you wish to contract a loan. In short, since "AER" is expressed as an annual percentage, its value is influenced by the term of the loan. Thus, a higher "AER" value, over a shorter period of time, does not mean a higher cost of the loan. Accordingly, because the largest cost included in the "AER" is the interest rate expressed as an annual percentage, this translates into: fewer years = less interest.

At the same time, if you want that "AER" help you in comparing several loans, you must choose similar products in terms of value and loan period.

Now that you know what to pay attention to when contracting a loan, see EXIMBANK's offers and choose the most advantageous one.