The true cost of a 50,000 KM loan

The payment is only part of the story

With an annuity loan you pay the same instalment every month, and the total cost only shows once you add the instalments up to the end of the term. For 50,000 KM at an example rate of 6% over 120 months the payment is 555.10 KM — it sounds affordable, but over 10 years you hand the bank 66,612.30 KM.

The 16,612.30 KM difference is total interest: a third of what you borrowed. That's why offers should be compared by the total amount repaid, not just the payment.

The term is the main lever: 5, 10 or 20 years

Same amount, same rate, three terms — and three completely different costs. A longer term means a smaller payment, but the debt stays open longer, so interest keeps running:

Fees and one-time costs

On top of interest come costs that never show in the payment: the loan processing fee, insurance premiums, notary or promissory-note costs. A 1% processing fee on 50,000 KM is 500 KM — lifting the total cost of our 10-year example to 67,112.30 KM.

One-time costs hurt most on shorter and smaller loans, because they spread over fewer instalments. Always ask for the complete list of costs before signing.

Nominal or effective rate — which one to compare?

The nominal rate drives the payment, but only the effective rate (APR/EKS) folds in all the fees and shows the true annual price of the loan. Two banks with the same nominal rate can have noticeably different effective rates. Note: the 6% used in this guide is an illustrative example — real rates depend on the bank, the loan type and your creditworthiness.

Nominal vs. effective interest rate – what's the difference? →