Actual Annual Interest Rate (AAIR) Calculator is assigned for calculation of total credit cost in interest rates. It is necessary to pay attention to additional commission fees collected for credit registration and service, etc. Due to additional commission fees Actual Annual Interest Rate of a credit may be some points higher than a nominal one.
AAIR calculator is used for independent comparison between actual costs of different credits.
Example:
Borrower pays AZN 274.11 monthly for AZN 6000 credit issued for 24 months at nominal interest rate of 9%. When signing the contract borrower pays AZN 60 commission fee and AZN 10 for insurance.
Annual nominal interest rate = 9%
AAIR = 10,2%
All commercial banks of Azerbaijan Republic should disclose AAIR and indicate it in credit agreements. This calculator is based on the calculation methodology worked out by the Central Bank of Azerbaijan Republic.
The calculator gives an opportunity to calculate 3 types of payments: annuity payment – equal monthly payment on a credit, which includes amount of accrued interest and principal amount.-Interest amount monthly, principal amount at the end – only interest on credit is paid on a monthly basis, while principal amount is paid at the end of credit agreement term.-Everything at the end – interest and principal amounts are paid at the end of credit agreement term.
Actual Annual Interest Rate Calculator has been worked out by the Central Bank of Azerbaijan Republic in cooperation with Azerbaijan Banks Association and Savings Banks Foundation for International Cooperation (Germany).