The NBS compiled information on the annual effective interest rate (hereinafter: EIR) at which banks offer the selected products to natural persons.
Banks are the source of information. The information is presented using the representative example:
- for a new offer;
- for natural persons with bank accounts and regular monthly wage inflow;
- average monthly net wage RSD 54,344;
- age of a natural person – 43;
- as at 31 March 2018.
We stress that these overviews are purely for informational purposes, and the NBS cannot be held accountable for the accuracy of presented information, even though it will make efforts, within its remit, to obtain updated information from banks.
For precise information on the EIR and other conditions regarding the use of selected products, citizens should contact a specific bank. Also, since the information is related to the selected representative examples, and banks’ operations are governed by their business policies which establish the manner and conditions of providing certain financial services, every consumer may seek information about these conditions from different banks and eventually, based on the obtained information and consideration of his/her needs, decide whether to sign the contract and with which bank.
The NBS points out the importance of monitoring and comparing EIRs, as rates inclusive of all costs (e.g. loan approval, use and repayment costs) borne by financial service consumers (e.g. interest, fees, taxes and alike). These costs are expressed as the percentage of the total annual amount of these services, on the basis of which consumers can, among other things, compare the offers of different banks.
Before signing the contract, in particular note the following
The EIR is a discount rate which equalises, annually, the present values of all cash flows, i.e. the present values of all cash receipts with the present values of all cash outlays arising from the use of financial services, known at the moment of rate calculation.
Cash flows include:
- all loan repayments and disbursements;
- costs borne by financial service consumers (e.g. interest, fees, taxes and alike) and benefits they receive (interest and other unconditional benefits);
- costs of secondary services which are the condition for using a financial service or for using it in a certain manner (e.g. life insurance costs, property insurance costs, personal insurance costs, etc.);
- if opening an account is the condition for using a financial service, those cash flows also include the costs of account opening and maintenance and all costs associated wtih those cash flow transactions.
These cash flows do not include:
- costs incurred due to the breach of contractual provisions;
- costs arising from the purchase of goods, incurred regardless of whether the payment was in cash or otherwise.
The EIR calculation is based on the following assumptions:
- the contract on the financial service will remain in effect during the contractual period;
- the contracting parties will meet all of their contractual obligations within the deadlines stated in the contract;
- the nominal interest rate and other costs will remain unchanged until the end of the contractual period.
The bank is obliged to calculate the EIR in a uniform, prescribed manner for the purpose of comparing the same types of offers of different banks.