Many people wonder how it is possible that loans that were advertised as very cheap actually have huge costs for them. In this article, we present a package of the most important information about APRC and RSO – these are two extremely important indicators, thanks to which you can get a lot of information about the cost of a given loan. We invite you to read carefully!
Remember that before you take out a loan
The vast majority of borrowers consider the interest rate on a given product to be the basic criterion before making any commitment. They pay special attention to interest rates. Another value, the APRC, is also very much related to the interest rate. Each bank and non-bank institution is obliged to provide each loan or loan with the offer. Some misidentify the APRC and RSO – these are values that are very different from each other.
So what are the differences between APRC an RSO? How does the lack of one letter “r” translate into the final cost of a loan or credit? How do financial institutions manipulate borrowers to encourage the use of their offer? Below we are unveiling the secret.
Definition of APRC
APRC is one of the most important indicators. It indicates very precisely the total costs of a given loan or loan. The abbreviation for the APRC is the Actual Annual Interest Rate.
This ratio determines the percentage ratio of the total cost of credit to its amount – the sum of money we borrowed from a given bank or non-bank institution. In a situation where we take out a loan of USD 100,000 and all the costs of a given loan amount to USD 10,000, the APRC will also be 10%.
In comparison to the nominal interest rate, which banks usually promote their offers, the APRC includes virtually all fees related to granting credit. The standard nominal interest rate includes only the margin and reference rate. Apart from these two components, the APRC includes cross-selling, commission, and all additional services.
Definition of RSO
RSO is an abbreviation that many people mistakenly identify with the APRC. This value is very different from the Real Annual Interest Rate described above. The whole myk results from the lack of the word “real”. The value of the RSO has virtually nothing to do with the total cost of the loan. The annual interest rate (RSO) is really the value of the interest rate on the loan – the sum of the margin that a given bank or financial institution will earn on our product.
This indicator also includes the reference rate set for a given loan. RSO does not take into account any other costs – we are talking here about foreign currency loan tax, commissions, loan servicing, etc.
APRC and RSO – the number of differences is huge
The differences between the APRC index and RSO is a whole bunch. In the case of some loans, it may even amount to tens of thousands of zlotys. Even in a situation where an institution boasts that its annual percentage rate is 0%, in practice, it can mean great costs for us.