Interest Calculation Methodology and Annual Percentage Rate of Charge


The annual interest rate for loans with a floating interest rate is calculated as follows:
 

  Annual interest rate  

=

  Reference interest rate

+

 Margin  


  but not less than the Minimum interest rate, as set in each
  individual loan contract  
 

 

 

Reference interest rate


EURIBOR is an average interest rate that reflects the interest rate at which banks in the Euro Zone exchange term deposits in EUR between each other. The reference rate is fixed on a weekly and monthly basis in line with the relevant maturities of deposits, and its fixings are published daily by the European Banking Federation in Brussels, Belgium.

ProCredit Bank applies as the reference interest rate on all its floating interest rate loans 6-month EURIBOR.

In setting the annual interest rate, the reference rate is applied as follows:
  • Upon contract signing – the fixing as of 3 business days before the date of contract signing/tranche disbursement;
  • For each successive interest rate period of the loan -  the fixing as of three business days prior to the due date of the preceding instalment as per the Loan Repayment Schedule.
Historic reference interest rates are listed on the Bank’s website in the order of their fixing dates.
 


Margin and Minimum Interest Rate


The margin and the minimum interest rate are fixed in the individual loan contract.

 

Examples of Interest Rate Calculation:

 

  Example 1 Example 2
Loan Currency EUR BGN
Loan Contract Date 29.07.2014 08.08.2014
Reference interest rate 6-month EURIBOR,
fixing as of 24.07.2014 - 0,308%
6-month EURIBOR,
fixing as of 05.08.2014 - 0,307%
Margin

6,25%

7,75%

Minimum Interest Rate

6,75%

8,00%

Annual Interest Rate Applicable to the First Period

Reference interest rate + Margin =

0,308% + 6,25% = 6,558%

The interest rate calculated according to this formula is lower than the minimum interest rate as fixed in the loan contract; therefore the minimum interest rate of 6,75% is applied in the relevant period.

Reference interest rate + Margin =

0,307% + 7,75% = 8,057%

The interest rate calculated according to this formula is higher than the minimum interest rate as fixed in the loan contract; therefore an annual interest rate of 8,057% is applied in the relevant period.

 

For more detailed information, see  Interest rate Methodology.

The annual percentage rate of charge (APRC) is an indicator of the total cost of a loan (including both interest and fees) expressed as an annual percentage rate of the disbursed loan amount. The APRC always exceeds the agreed interest rate on a loan.

Although there is no legal requirement to give APRC information on business loans, ProCredit Bank does provide its business clients with information about the total cost of borrowing from the bank. Such information is available from the bank’s website in the Interest Bulletin section, and is also provided in the communication between our business client advisers and our clients. In addition, APRC information is included in ProCredit Bank’s business loan contracts.

Calculation methodology
The APRC on business loans is calculated according to a methodology similar to the one applied in consumer lending, which is the established practice in compliance with the Consumer Loan Act.

The following types of cost are taken into account in the calculation of APRC on business loans:

  • Loan application processing fee 
  • Collateral appraisal fee – collected once, before loan disbursement
  • Disbursement fee – collected at loan disbursement
  • Interest on the loan
  • Annual management fee – collected annually and calculated on the outstanding principal at the end of each 12-month period as of the date of loan disbursement
  • Insurance premium as per the Bank’s General Insurance Policy – collected at loan disbursement as a single payment for the whole loan duration, or annually on the outstanding interest at the beginning of each 12-month period as of the date of loan disbursement
  • Current account monthly maintenance fee


Several key assumptions are applied to APRC calculation on all types of loans:

a) the loan contract is valid for its full duration as agreed in the contract and the bank and borrower fulfil their obligations according to the contractual terms and conditions
b) interest rate and other costs remain unchanged and applicable until the loan contract expires
Please note that the interest rates on business loans at ProCredit Bank are floating. Learn more about the interest rate calculation methodology 

Overdrafts and credit lines – specific factors
The ARPC varies according to how the loan is utilised and repaid. Consequently, the APRC on overdrafts and credit lines is calculated under the following assumptions:

а) the funds are made available for a 12-month period
b) the loan amount is utilised in full and immediately on the date of disbursement
c) interest is incurred and paid on a monthly basis
d) the loan amount is repaid in full at the end of the agreed period

Reference Interest Rate for Date 11/17/2017

SOFIBOR - BGN EURIBOR - EUR LIBOR - USD
3 months - 0.02000% 12 months - -0.19200%
  6 months - -0.27400%
12 months - 1.90622%
  6 months - 1.63211%