## Effective Interest Rate

Dear Customer,

This information is according to the Bank of Albania regulations “On the transparence of the Financial Bank Services and Products”, approved by decision No. 59, date 29.08.2008 and Regulation “On the Consummator Loan and Individual Mortgage Loan”, approved by decision No. 48, date 01.07.2015, by the Supervisory Council of the Bank of Albania.

Note: Used values on the examples are only for customer information on the Effective Interest Rate.

Definition

Effective Interest Rate (EIR) – is the customer loan total cost (interest and other commissions due to this loan) explained in annual percentage of the given loan value and calculated according to the formula:

m -tk m’ -tl

Σ Kk (1+i) = Σ Rl (1+i)

k=1 l=1

Explanation of letters and symbols:

m – Is the total number of loan repayment, if it is a term loan (cash flow), paid by the moneylender.

k – Is the number of the continuous loan repayment, if it is a term loan (cash flow), paid by the borrower so 1<k

Kk – Is the real loan value (cash flow) in the customer’s use during the period k.

tk – is the interval, expressed in years and parts of the year, between date value of the first loan repayment (first cash flow) in the customer’s usage (if it is a term loan) and the date of each afterward loan’s repayment t1=0

m’ – is the number of the total repayments (cash flow) paid by the customer for the loan repayment and/or expenses payment.

l – is the number of the continuous customer paid repayments (cash flow) for the loan (payment or expenses)

Rl – is the value of the repayment (cash flow) or customer’s expenses payment in the period 1.

tl – the interval, expressed in years and part of the year, between date value of the first loan repayment, in the customer’s usage (if it is a term loan), or loan disbursement date, if it is only one loan disbursement amount (first cash flow) and the date of any loan repayment and/or other customer’s expenses payment.

The given data are only indicative and may be change case by case.

If you are interested on any service/product not listed below, you are welcomed by the branches staff.

Assumptions on calculating the Effective Interest Rate:

American Bank of Investments calculating EIR of its products has done the assumptions:

1. for all the products categories is supposed the average amount according to the respective product.

2. Interest is supposed max.

3. Loan duration is supposed the average one.

4. Life insurance is supposed to be the average percentage given by the Insurance Companies.

5. Property is supposed to be living place in cases of Consummator or Housing Loan and business places in cases of business’s loans.

6. Commissions include flat fee and other administrative commissions according to the respective products.

7. No grace period is considering in any of these loans.

8. It is supposed the total loan amount disbursement.

9. Overdraft loan/ limit loan is supposed to be the total amount disbursement and the total use of the amount.