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## Effective Interest Rate

Dear Customer,

The following information is based upon the Bank of Albania regulations “On the Transparency of Financial Bank Services and Products”, approved by decision no. 59, dated 29.08.2008, and “On the Consumer Loan and Individual Mortgage Loan”, approved by decision no. 48, dated 01.07.2015, by the Supervisory Council of the Bank of Albania.

Note: values given in the examples are only for customer guidance 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 the 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 amount of loan repayment, if it is a term loan (cash flow), paid by the moneylender.

k – is the amount of the continuous loan repayment, if it is a term loan (cash flow), paid by the borrower, where 1<k.

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

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

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

l – is the number of 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 – is the interval, expressed in years and part of the year, between date of the first repayment of the loan for the customer’s use (if it is a term loan), or loan disbursement date, if it is only a single loan disbursement (first cash flow) and the date of any loan repayment, or other customer expenses payment.

The data given are only indicative and may be subject to change.

If you are interested in any service or product not listed below, you are welcome to meet staff in our branches.

Assumptions for calculating the Effective Interest Rate

In calculating EIR for its products, American Bank of Investments has made the following assumptions:

• For all product categories, the average amount allowed to be withdrawn is calculated according to the respective product.
• Interest is assumed to be a maximum.
• The deadline is assumed at an average extent.
• Life insurance is taken out, with the average percentage given by the insurance companies.
• The property is assumed to be a customer’s place of residence in the case of a housing loan, and a business place for a business loan.
• Commissions include a flat fee and other administrative commissions according to the respective products.
• No grace period is considered for any of these loans.
• The total loan amount is disbursed.
• The overdraft loan or limit is the total amount of disbursement and the total use of that amount.