Text of the Official Translation
"Registered"
by the Ministry of Justice
of the Republic of Armenia
29 December 2008
State registration No 05008408
BOARD OF THE CENTRAL BANK
OF THE REPUBLIC OF ARMENIA
16 December 2008 No 363-N
D E C I S I O N
ON APPROVING REGULATION 8/01 “EXPLANATIONS AND EXAMPLES FOR CALCULATION OF THE ACTUAL ANNUAL INTEREST RATE”
Taking as a basis part 4 of Article 14 of the Law of the Republic of Armenia “On consumer crediting” and guided by Article 20 of the Law of the Republic of Armenia “On the Central Bank of the Republic of Armenia”, the Board of the Central Bank of the Republic of Armenia decides:
1. To approve Regulation 8/01 “Explanations and examples for calculation of the actual annual interest rate”, pursuant to the Annex (attached).
2. This Decision shall enter into force on 24 January 2009.
Governor of the Central Bank
of the Republic of Armenia A. Javadyan
23 December 2008
city of Yerevan
Annex
To Decision of the Board
of the Central Bank
of the Republic of Armenia
No 363-N of 16 December 2008
(heading edited by No 2-N of 17 January 2020)
REGULATION 8/01
EXPLANATIONS AND EXAMPLES FOR CALCULATION OF THE ACTUAL ANNUAL INTEREST RATE
CHAPTER 1
GENERAL PROVISIONS
1. This Regulation shall define explanations and examples for calculation of the actual annual interest rate to be included in the crediting contract, advertisement, announcement, proposal, offer or invitation to make an offer by banks, branches of foreign banks, credit organisations and pawnshops operating in the territory of the Republic of Armenia in the cases prescribed by the Law of the Republic of Armenia “On consumer crediting” (hereinafter referred to as "the Law") and the Law of the Republic of Armenia “On home mortgage crediting”.
2. This Regulation shall not extend to the loans provided by banks, the cards issued for which may provide an opportunity to enjoy "luxury" privileges that are not financial operations (for example, providing compensation in case of loss of luggage and flight delay, medical compensation, purchase insurance (loss, damage of purchased goods, etc.), luggage insurance, concierge service, car towing service, pass card service (Priority Pass), access to business lounges (Lounge Key), airport escort (SpeedPass service), visa assistance, skip-the-line service, etc.). Provision of goods in the field of retail sales and services in the field of service not listed in this point (for example, discounts offered, bonuses, cashback when paying by card, etc.) shall not be considered as "luxury" privileges provided for by this point.
CHAPTER 2
CONCEPTS
3. The main concepts used in this Regulation shall be the following:
(1) "Credit repayments" — all payments made by the consumer for crediting when receiving the credit and/or during the effect thereof — the principal amount of the credit and fees included in the total cost of crediting (interest amounts and other payments).
(2) “Other payments” — elements included in other payments defined by point 5 of this Regulation.
(3) “Total cost of crediting” — all interest amounts and other payments that the consumer is obliged to pay (make) for crediting (when receiving the credit and during the effect thereof);
(4) “Actual annual interest rate” — the total cost of consumer’s crediting expressed in annual interest rate of the provided credit and calculated based on the formula indicated in Article 4 of this Regulation.
(5) “Creditor” — in accordance with the meaning prescribed by the Law of the Republic of Armenia "On consumer crediting".
(6) “Credit” — in accordance with the meaning prescribed by the Law of the Republic of Armenia "On consumer crediting".
CHAPTER 3
FORMULA FOR CALCULATION OF THE ACTUAL ANNUAL INTEREST RATE
EXPLANATIONS AND EXAMPLES
4. Banks, branches of foreign banks, credit organisations and pawnshops shall calculate the actual annual interest rate for credits provided or to be provided thereby, based on the formula for calculating the actual annual interest rate provided by Article 13 of the Law:
where:
i — is the actual annual interest rate which, pursuant to parts 5 and 7 Article 2 of the Law, is the total cost of consumer’s crediting, expressed by the annual interest for the credit provided, and which includes all interests and other payments that the consumer is obliged to pay when receiving the credit and during the whole period of effect thereof.
A — is the initial amount of credit provided to the consumer.
Where the credit contract does not set a maximum credit limit, the maximum limit of the provided credit shall be one million drams.
n — is the reference number of the credit repayment (credit principal amount, interest amounts and/or other payment amounts) by the consumer (including the payment made at the moment of receiving the credit). Moreover, making the payments of the credit principal amount, interest amounts and/or other payments within one day shall be considered as one payment.
N — is the number of the last credit repayment (credit principal amount, interest amounts and/or other payment amounts) (including the payment made at the moment of receiving the credit), after which the obligations assumed by the consumer under the credit contract shall be considered as repaid. For example: the credit has been provided for 12 months, on condition of concurrent monthly payments of the principal amounts and interest amounts of the credit and other payments envisaged at the moment of providing the credit; therefore, N=13, as one payment is made at the moment of providing the credit and 12 more payments — according to the conditions of the credit contract.
Kn — is the amount of the nth payment (principal amount, interest amounts and/or other payment amounts) made by the consumer until the moment of receiving the credit, at the moment of receiving the credit and/or during the effect thereof.
In case the credit contract allows for changes in the amount or size of interests and/or other fees included in the total cost of consumer’s crediting and the changes thereto may not be expressed in monetary terms, the actual annual interest rate must be calculated assuming that the interests and/or other fees included in the total cost of consumer’s crediting will remain stable and will be applied until the end of the effect of the crediting contract.
Dn — is the number that shows how many days have passed from the day of receiving the credit until the subsequent nth day of repayment of the credit amount, inclusive.
For example, the credit was provided on 15 September, other payments are envisaged for the provision of the credit at the moment of receiving the credit, and the first partial repayment of the credit will take place on 15 October of the same year. In this case, D1=0, as other payments will be made on the day of receiving the credit, D2=30, as the number of days from the provision of the credit to the subsequent repayment is 30, and the number of the days from D3 to Dn is calculated according to the same principle.
Where the crediting contract provides that the consumer may receive the credit amount in portions or may choose the time of receiving the credit amount, the day of concluding the crediting contract shall be considered as the day of receiving the credit.
5. Other fees included in the calculation of the total cost of crediting and, therefore, the actual annual interest rate shall include the following mandatory fees (if any) paid by the consumer for crediting:
(1) credit extension fee;
(2) in case of having overdue repayments of a previously received credit, the fee for extending a new credit from the given creditor;
(3) fee for preparation of crediting documents;
(4) credit servicing fee;
(5) fee for pledging;
(6) fees for membership or subscription to organisations, unions and other groups, if the creditor is the founder or participant of those organisations, unions or other groups, and the credit terms depend on such subscription or membership:
For example: the bank announces privileged conditions for concluding a credit contract for persons that will become members of the union founded thereby. An annual membership fee shall be required for membership. The amount of the membership fee(s) to be paid by the consumer during the credit term must be included in the calculation of the actual annual interest rate;
(7) fees for insurance, valuation and other supporting services, if the use of such supporting services is a pre-condition for concluding a crediting contract or receiving the advertised annual interest rate, and the creditor is the beneficiary of those services, or the creditor establishes the scope of persons with whom the consumer has the right to conclude a contract on provision of supporting services; Examples:
a. The bank, as a pre-condition for concluding the crediting contract, requires insurance of the pledged property, being the beneficiary of the insurance contract to be concluded;
b. The bank, as a pre-condition for concluding the crediting contract, requires insurance of the pledged property, as well defines the scope of persons with whom the consumer has the right to conclude an insurance contract;
c. The bank, as a pre-condition for receiving the advertised actual annual interest rate, requires insurance of the pledged property, being the beneficiary of the insurance contract to be concluded;
d. The bank, as a pre-condition for receiving the advertised actual annual interest rate, requires insurance of the pledged property, as well defines the scope of persons with whom the consumer has the right to conclude an insurance contract;
e. The bank, as a pre-condition for concluding the crediting contract, requires insurance of the pledged property, being the beneficiary of the insurance contract to be concluded, as well defines the scope of persons with whom the consumer has the right to conclude an insurance contract;
f. The bank, as a pre-condition for receiving the advertised actual annual interest rate, requires insurance of the pledged property, being the beneficiary of the insurance contract to be concluded, as well defines the scope of persons with whom the consumer has the right to conclude an insurance contract;
(8) all types of fees associated with a payment card when the consumer has no reasonable alternative in receiving the credit:
For example, a bank provides the credit only through a new payment card provided thereby, in which case the consumer has no reasonable alternative — an opportunity to transfer to another valid payment card belonging thereto. Moreover, the payment card shall be considered as valid, if it has been provided to the consumer before submitting the application for crediting, and transactions (deposits, credits) were carried out by the consumer with the payment card before submitting the application for crediting;
(9) The commission charged for credit withdrawal, assuming that the consumer will withdraw the credit in full from the ATM of the creditor, if he or she has no reasonable alternative to use the credit amount (e.g. in person receipt from the cash register of the bank). Moreover, if mandatory replenishments are envisaged during the use of the credit, commissions for current cash withdrawals made after the mandatory replenishments shall not be included in the calculation of the actual annual interest rate;
(10) other fees related to crediting, which the consumer is obliged to pay for crediting, except for the fees not included in the total cost of consumer’s crediting prescribed by part 1 of Article 15 of the Law.
6. The size of the actual annual interest rate calculated by the formula indicated in point 4 of this Regulation must be rounded at least to one hundredth and multiplied by 100 in order to get the percentage value.
7. In case a credit repayment schedule is not defined by the crediting contract or repayment terms are not defined by the provisions of the crediting contract, the credit repayment period in the calculation of the actual annual interest rate shall be considered to be one year. In case the crediting contract defines more than one credit repayment period, the credit repayment period shall be considered to be the earlier period defined in the contract, unless otherwise provided for by the crediting contract.
8. During the calculation of the actual annual interest rate of credits provided in foreign currency, the credit amount shall be converted into AMD, and the exchange rate published on the official website of the Central Bank of the Republic of Armenia shall be taken as a basis for the conversion rate. Moreover, in the crediting contract, in the individual lists of the essential conditions of consumer credits, the basis for calculating the actual interest rate shall be the latest foreign currency exchange rate published on the official website of the Central Bank of the Republic of Armenia, and in the remaining cases, including in information bulletins and any advertisement, the foreign currency exchange rate published on the official website of the Central Bank of the Republic of Armenia as of the date of their preparation. The exchange rate taken as basis during the actual repayments of the loan may differ from the exchange rate taken as a basis during the calculation of the actual interest rate.
9. If the crediting contract allows the consumer to make repayments on a free schedule, it is assumed that the entire amount of the credit shall be repaid at the end of the period and in full.
10. If the credit envisages different forms of repayments, with different mandatory fees or interest rates, which may not be given a monetary expression and the amount of the actual annual interest rate may not be calculated in a reasonable way, it is assumed that the entire amount of the credit shall be repaid in the most common repayment form used by the financial organisation for the given/similar credits, with mandatory fees and interest rates.
11. If the crediting contract envisages different forms of repayments for different time periods, with different mandatory fees or interest rates, which are known in advance for each time period, the mandatory fees and interest rates shall be included in the amount determined for the given time period in the calculation of the actual annual interest rate.
12. In case of a credit line (overdraft), it is assumed that:
(1) the credit will be used in full by the consumer starting from the day of concluding the crediting contract;
(2) on the day following the subsequent repayment of the revolving credit line, the consumer will again use the credit line in full in the amount of the unused portion;
(3) the credit line will be repaid in full at the end of the repayment day of the crediting contract;
(4) the grace period (if any) is not taken into account in the calculation of the actual annual interest rate.
13.
Example 1: Simple loan — Equal repayment
13.1. Loan conditions Amount: AMD 500 000
Nominal interest rate: 10%
Repayment: monthly, equal
Maturity: 1 year
13.2. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent
repayment — Dn Interest amounts repaid Repayments of the principal amount Subsequent total repayment
amount — Kn
1 31 4,246.58 39,708.87 43,955.44
2 62 3,909.32 40,046.12 43,955.44
3 90 3,223.80 40,731.65 43,955.44
4 121 3,223.26 40,732.18 43,955.44
5 151 2,784.50 41,170.94 43,955.44
6 182 2,527.65 41,427.79 43,955.44
7 212 2,105.61 41,849.83 43,955.44
8 243 1,820.36 42,135.08 43,955.44
9 274 1,462.50 42,492.94 43,955.44
10 304 1,066.07 42,889.38 43,955.44
11 335 737.33 43,218.11 43,955.44
12 365 358.33 43,597.11 43,955.44
Total 27,465.31 500,000.00 527,465.31
13.3. Calculation
N=12
i=10.47
(AAIR=0.1047*100=10.47%)
14.
Example 2: Simple loan - Non-equal repayment
14.1. Loan conditions Amount: AMD 500 000
Nominal interest rate: 10%
Repayment: the principal amount is equal, but the interests are non-equal
Maturity: 1 year
14.2. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 31 4,246.58 41,666.67 45,913.24
2 62 3,892.69 41,666.67 45,559.36
3 90 3,196.35 41,666.67 44,863.01
4 121 3,184.93 41,666.67 44,851.60
5 151 2,739.73 41,666.67 44,406.39
6 182 2,477.17 41,666.67 44,143.84
7 212 2,054.79 41,666.67 43,721.46
8 243 1,769.41 41,666.67 43,436.07
9 274 1,415.53 41,666.67 43,082.19
10 304 1,027.40 41,666.67 42,694.06
11 335 707.76 41,666.67 42,374.43
12 365 342.47 41,666.67 42,009.13
Total 27,054.79 500,000 527,054.79
14.3. Calculation
N=12
i=10.47
(AAIR=0.1047*100=10.47%)
15.
Example 3: Simple loan — Equal quarterly repayment
15.1. Loan conditions Amount: AMD 500 000
Nominal interest rate: 10%
Repayment: quarterly, equal
Maturity: 1 year
15.2. Repayment Schedule
Repayment frequency— n Number of days from receiving the credit to the subsequent repayment — Dn Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 92 12,602.74 120,293.02 132,895.76
2 181 9,258.61 123,637.16 132,895.76
3 273 6,454.36 126,441.40 132,895.76
4 365 3,267.35 129,628.42 132,895.76
Total 31,583.06 500,000 531,583.06
15.3. Calculation
N=4
i=10.38
(AAIR=0.1038*100=10.38%)
16.
Example 4: Simple loan — Non-equal quarterly repayment
16.1. Loan conditions Amount: AMD 500 000
Nominal interest rate: 10%
Repayment: quarterly, non-equal
Maturity: 1 year
16.2. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 92 12,602.74 125,000 137,602.74
2 181 9,143.84 125,000 134,143.84
3 273 6,301.37 125,000 131,301.37
4 365 3,150.68 125,000 128,150.68
Total 31,198.63 500,000 531,198.63
16.3. Calculation
N=4
i=10.38
(AAIR=0.1038*100=10.38%)
17.
Example 5: Simple loan – Lump-sum payment of the interest amount
17.1. Loan conditions Amount: AMD 500 000
Nominal interest rate: 10%
Repayment: the interest amount is paid in full with the first payment of the
principal amount for loan repayment
Maturity: 1 year
17.2. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 30 26,997.72 41,666.67 68,664.38
2 61 41,666.67 41,666.67
3 92 41,666.67 41,666.67
4 120 41,666.67 41,666.67
5 151 41,666.67 41,666.67
6 181 41,666.67 41,666.67
7 212 41,666.67 41,666.67
8 242 41,666.67 41,666.67
9 273 41,666.67 41,666.67
10 304 41,666.67 41,666.67
11 334 41,666.67 41,666.67
12 365 41,666.67 41,666.67
Total 26,997.72 500,000 526,997.72
17.3. Calculation N=12
i=10.82
(AAIR=0.1082*100=10.82%)
18.
Example 6: Loan with other lump-sum payments at the moment of receiving the loan
18.1. Loan conditions Amount: AMD 500 000
Nominal interest rate: 10%
Repayment: equal monthly repayments (the principal amount and the interests
together are the same amount each month)
Maturity: 1 year
Other payments (on the day of receiving the loan)
Lump-sum fee for preparation of documents — AMD 5 000
Lump-sum fee for loan servicing — AMD 1 000.
18.2. Calculation N=13, of which one payment is the payment at the moment of receiving the credit
and the other 12 are the payments of the principal amount and interests.
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =5000+1000=6000
i=13.01%
(AAIR=0.1301*100=13.01%)
18.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 6000 6000
2 30 4,109.59 39,840.90 43,950.49
3 61 3,908.20 40,042.29 43,950.49
4 92 3,568.12 40,382.37 43,950.49
5 120 2,913.03 41,037.46 43,950.49
6 151 2,876.60 41,073.88 43,950.49
7 181 2,446.22 41,504.27 43,950.49
8 212 2,175.26 41,775.23 43,950.49
9 242 1,761.73 42,188.76 43,950.49
10 273 1,462.14 42,488.35 43,950.49
11 304 1,101.28 42,849.21 43,950.49
12 334 713.57 43,236.92 43,950.49
13 365 370.13 43,580.35 43,950.49
Total 6000 27,405.86 500,000 533,405.86
19.
Example 7: Loan during loan servicing with other variable payments
19.1. Loan conditions Amount: AMD 3 000 000
Nominal interest rate: 10%
Repayment: equal monthly repayments (the principal amount and the interests
together are the same amount each month)
Maturity: 2 years
Other payments:
Lump-sum appraisal fee at the moment of receiving the loan — AMD 15 000
Lump-sum fee for servicing at the moment of receiving the loan — AMD 3000
Lump-sum fee for preparation of documents at the moment of receiving the loan —
AMD 5000
Monthly loan servicing fee — AMD 1000 (total AMD 24,000)
Annual insurance fee in the amount of 2.5% of the value of the property, of which one payment (3,000,000 * 0.025 = AMD 75,000) is made on the day of receiving the loan, and
the other payment (the value taking into account the depreciation of the vehicle:
AMD 2,700,000 AMD * 0.025 = AMD 67,500) is made next year, on the 10th day
following the n=13th repayment.
19.2. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 98,000 98000
2 31 1000 25,479.45 112,925.24 139,404.69
3 59 1000 22,147.42 116,257.27 139,404.69
4 90 1000 23,532.97 114,871.72 139,404.69
5 120 1000 21,829.69 116,575.00 139,404.69
6 151 1000 21,567.26 116,837.43 139,404.69
7 181 1000 19,911.23 118,493.46 139,404.69
8 212 1000 19,568.56 118,836.13 139,404.69
9 243 1000 18,559.26 119,845.43 139,404.69
10 273 1000 16,975.55 121,429.14 139,404.69
11 304 1000 16,510.08 121,894.61 139,404.69
12 334 1000 14,975.63 123,429.07 139,404.69
13 365 1000 14,426.51 123,978.18 139,404.69
14 375 67,500 67,500.00
15 396 1000 13,373.55 125,031.15 139,404.69
16 424 1000 11,120.19 127,284.50 139,404.69
17 455 1000 11,230.59 127,174.10 139,404.69
18 485 1000 9,823.05 128,581.64 139,404.69
19 516 1000 9,058.42 129,346.27 139,404.69
20 546 1000 7,703.09 130,701.60 139,404.69
21 577 1000 6,849.79 131,554.90 139,404.69
22 608 1000 5,732.48 132,672.21 139,404.69
23 638 1000 4,457.10 133,947.59 139,404.69
24 669 1000 3,468.04 134,936.66 139,404.69
25 699 1000 2,247.10 136,157.60 139,404.69
26 730 1000 1,165.59 137,239.10 139,404.69
Total 189,500 321,712.61 3,000,000 3,511,212.61
19.3. Calculation N=26, of which one payment is the payment at the moment of receiving the credit, one is the insurance premium for the second year, and the remaining 24 are the payment of the principal amount, interests and other payments made during the loan servicing, which are scheduled to be made simultaneously every month.
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =15,000+3,000+5,000+75,000=98,000
i=17.37%
(AAIR=0.1737*100=17.37%)
20.
Example 8: Short-term loan
20.1. Loan conditions Amount: AMD 800 000
Nominal interest rate: 10%, if the consumer is a member of any union founded by the creditor, and 25%, if the consumer is not a member of that union
Repayment: equal quarterly repayments (the principal amount and the interests
together are the same amount each month)
Maturity: 9 months
Other payments:
Lump-sum fee — AMD 3,000
Servicing fee — AMD 2,000 each quarter
Lump-sum fee for membership of the union — 20,000*9/12= AMD 15,000
20.2. Calculation The creditor is a member of the union
N=4, of which one payment is the payment at the moment of receiving the credit and the other 3 are the monthly payments of the principal amount and interests
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =3,000+15,000=18,000
i=17.27%:
(AAIR=0.1727*100=17.27%)
20.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 18,000 0 18,000 18,000
2 92 2,000.00 20,164.38 259,908.80 282,073.18
3 181 2,000.00 13,169.35 266,903.84 282,073.18
4 273 2,000.00 6,885.82 273,187.36 282,073.18
Total 24,000 40,219.55 800,000.00 846,219.55
21.
Example 9: Credit line (Overdraft)
21.1. Loan conditions Type: revolving
Amount: AMD 1 500 000
Nominal interest rate: 20%
Repayment: repayment of the principal amount and interest amounts in full at the end of the term
Maturity: 12 months
Grace period — not envisaged
Minimum monthly repayment/replenishment limit (or movement) — 10% of the loan
Servicing fee — AMD 5000 per year
Withdrawal commission at bank ATMs — 3%.
21.2. Calculation In case of withdrawing the loan in full for the first time, the withdrawal amount will be AMD 45,000 (1,500,000*0.03)
As the credit line is revolving, it is assumed that the amount deposited with the minimum monthly repayment limit (1,500,000*0.1 = AMD 150,000) will be used again in full. Additional withdrawals are not considered as a factor in calculating the actual annual interest rate
Thus, other payments made at the moment of receiving the credit (K1) turn out to be:
Ki = 5,000+45,000=AMD 50,000
i=24.14%
(AAIR=0.2414*100=24.14%)
21.3. Repayment Schedule
Repayment frequency— n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 50,000 0 0 50,000
2 31 0 0 0 0
3 59 0 0 0 0
4 90 0 0 0 0
5 120 0 0 0 0
6 151 0 0 0 0
7 181 0 0 0 0
8 212 0 0 0 0
9 243 0 0 0 0
10 273 0 0 0 0
11 304 0 0 0 0
12 334 0 0 0 0
13 365 0 300,000 1,500,000 1,800,000
Total 300,000 1,500,000 1,850,000
22.
Example 12: Revolving credit line with monthly payments of the used portion and interest amounts
22.1. Loan conditions Amount: AMD 750 000
Nominal interest rate: 15%
Repayment — with monthly payments of 10% of the used portion and interest amounts
Cash withdrawal: 1%
Other payments:
lump-sum fee for provision of the loan in the amount of 1,5% of the principal amount
(at the moment of conclusion — AMD 11250)
monthly fee for loan servicing — AMD 5000
22.2. Calculation Taking into consideration the peculiarities of the loan, in this case the actual annual interest rate of the loan must be calculated assuming that the borrower withdraws the loan amount at once and in full, the period used for the purpose of calculation is 1 year (will be repaid within 1 year), the amount deposited at the minimum monthly repayment limit will be used again in full, additional withdrawals are not considered as a factor in calculating the actual annual interest rate. As a result, we will get the following indicators:
Fee for credit line withdrawal — AMD 7500.
i=20.14%
(AAIR=0.2014*100=20.14%)
22.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 23,750 0 0 23,750.00
2 31 0 9,554.79 9,554.79
3 59 0 8,630.14 8,630.14
4 90 0 9,554.79 9,554.79
5 120 0 9,246.58 9,246.58
6 151 0 9,554.79 9,554.79
7 181 0 9,246.58 9,246.58
8 212 0 9,554.79 9,554.79
9 243 0 9,554.79 9,554.79
10 273 0 9,246.58 9,246.58
11 304 0 9,554.79 9,554.79
12 334 0 9,246.58 9,246.58
13 365 0 9,554.79 750,000 759,554.79
Total 23,750 112,500 750,000 886,250
23.
Example 10: Agricultural loan in foreign currency
23.1. Loan conditions Amount: USD 2000
Nominal interest rate: 11%
Repayment: monthly, equal
Maturity: 18 months
Other payments:
Fee for processing the loan request — AMD 5000
lump-sum fee for provision of the loan in the amount of 4% of the principal amount
(at the moment of conclusion)
monthly fee for loan servicing: AMD 2000
The Central Bank settlement exchange rate of the USD is AMD 475
23.2. Calculation Taking into account the conditions of the loan, as well as the fact that the values expressed in foreign currency are converted at the settlement rate of the Central Bank on the day of providing (extending) the loan, we will get the following indicators:
Amount of loan provided — 2000*475=AMD 950,000
Lump-sum fee for providing the loan — 2000*4/100*475= AMD 38,000
i=24.06%
(AAIR=0.2406*100=24.06%)
23.3
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 43,000 0 0 43,000.00
2 31 2000 8,875.34 48,601.80 59,477.14
3 59 2000 7,606.32 49,870.83 59,477.14
4 90 2000 7,955.37 49,521.78 59,477.14
5 120 2000 7,251.01 50,226.13 59,477.14
6 151 2000 7,023.47 50,453.67 59,477.14
7 181 2000 6,340.75 51,136.39 59,477.14
8 212 2000 6,074.37 51,402.77 59,477.14
9 243 2000 5,594.14 51,883.00 59,477.14
10 273 2000 4,944.61 52,532.54 59,477.14
11 304 2000 4,618.64 52,858.50 59,477.14
12 334 2000 3,991.76 53,485.39 59,477.14
13 365 2000 3,625.13 53,852.01 59,477.14
14 396 2000 3,122.02 54,355.12 59,477.14
15 424 2000 2,361.22 55,115.92 59,477.14
16 455 2000 2,099.29 55,377.85 59,477.14
17 485 2000 1,530.90 55,946.25 59,477.14
18 516 2000 1,059.25 56,417.90 59,477.14
19 546 2000 515.00 56,962.14 59,477.14
Total 79,000 84,588.60 950,000 1,113,588.60
24.
Example 11: Phased loan for agricultural purposes
24.1. Loan conditions Amount: USD 2000
Nominal interest rate: 10%
Repayment: the principal amount is paid at the end of the maturity, and the interest amounts and fess for monthly loan servicing are paid equally every month
Maturity: 24 months
Other payments:
Fee for processing the loan request — AMD 5000
lump-sum fee for provision of the loan in the amount of 4% of the principal amount (at the moment of conclusion)
monthly fee for loan servicing: AMD 2000
The sum shall be provided to the borrower in stages: USD 1000 will be available thereto in the 1st year, and another USD 1000 will be available thereto in the 2nd year.
The Central Bank settlement exchange rate of the USD is AMD 475
24.2. Calculation Taking into account the conditions of the loan, as well as the fact that the values expressed in foreign currency are converted at the settlement rate of the Central Bank on the day of providing (extending) the loan, we will get the following indicators:
Amount of loan provided — 2000*475=AMD 950000
Lump-sum fee for providing the loan — 2000*4/100*475= AMD 38000
Taking into account the peculiarities of the loan (grace period), in this case the actual annual interest rate of the loan must be calculated assuming that the borrower immediately withdraws the credit line from the moment of its availability: USD 1000 at the time of concluding the contract and USD 1000 on the same date the following year.
i=12.94%
(AAIR=0.1294*100=12.94%)
24.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 43000 0 0 43,000.00
2 31 2000 4,034.25 0 6,034.25
3 59 2000 3,643.84 0 5,643.84
4 90 2000 4,034.25 0 6,034.25
5 120 2000 3,904.11 0 5,904.11
6 151 2000 4,034.25 0 6,034.25
7 181 2000 3,904.11 0 5,904.11
8 212 2000 4,034.25 0 6,034.25
9 243 2000 4,034.25 0 6,034.25
10 273 2000 3,904.11 0 5,904.11
11 304 2000 4,034.25 0 6,034.25
12 334 2000 3,904.11 0 5,904.11
13 365 2000 4,034.25 0 6,034.25
14 396 2000 4,034.25 0 6,034.25
15 424 2000 7,287.67 0 9,287.67
16 455 2000 8,068.49 0 10,068.49
17 485 2000 7,808.22 0 9,808.22
18 516 2000 8,068.49 0 10,068.49
19 546 2000 7,808.22 0 9,808.22
20 577 2000 8,068.49 0 10,068.49
21 608 2000 8,068.49 0 10,068.49
22 638 2000 7,808.22 0 9,808.22
23 669 2000 8,068.49 0 10,068.49
24 699 2000 7,808.22 0 9,808.22
25 730 2000 8,068.49 950,000 960,068.49
Total 91,000 138,465.75 950,000 1,179,465.75
25.
Example 11: Agricultural loan with quarterly repayment
25.1. Loan conditions Amount: USD 2000
Nominal interest rate: 10%
Repayment: quarterly, equal
Maturity: 18 months
Other payments:
Fee for processing the loan request — AMD 5000
lump-sum fee for provision of the loan in the amount of 4% of the principal amount (at the moment of conclusion)
monthly fee for loan servicing: AMD 2000
The Central Bank settlement exchange rate of the USD is AMD 475
25.2. Calculation Taking into account the conditions of the loan, as well as the fact that the values expressed in foreign currency are converted at the settlement rate of the Central Bank on the day of providing (extending) the loan, we will get the following indicators:
Amount of loan provided — 2000*475=AMD 950000
Lump-sum fee for providing the loan — 2000*4/100*475= AMD 38000
i=18.18%
(AAIR=0.1818*100=18.18%)
25.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
0 0 43,000 0 0 43,000.00
1 90 2000 23,424.66 148,999.75 174,424.40
2 181 2000 19,970.14 152,454.26 174,424.40
3 273 2000 16,346.91 156,077.49 174,424.40
4 365 2000 12,412.90 160,011.50 174,424.40
5 455 2000 8,197.57 164,226.83 174,424.40
6 546 2000 4,194.23 168,230.17 174,424.40
Total 55,000 84,546.42 950,000 1,089,546.42
26.
Example 13: Mortgage loan in dram, with fixed interest rate
26.1. Loan conditions Amount: AMD 15,000,000
Nominal interest rate: 12%
Repayment: monthly, equal
Maturity: 120 months
Other payments:
Fee for processing the request — AMD 10,000
pledge appraisal fee — AMD 20,000
cadastre statement fee — AMD 10,000
fee for notarial services — AMD 15,000
lump-sum fee for providing the loan —75,000
insurance — AMD 45,000 per year
26.2. Calculation N=121, of which one payment is the payment at the moment of receiving the loan and the other 120 are the payments of the principal amount and interests.
The fees that are payable by the consumer, regardless of whether the property is acquired with or without loan (for example, cadastre fee or notary fee) shall not be included in the AAIR calculation.
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =10,000+20,000+75,000+45,000=AMD 150,000
i=13.39%
(AAIR=0.1339*100=13.39%)
26.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 150,000 0 0 150,000
2 30 0 147,945.21 70,618.65 218,563.86
3 61 0 152,156.98 66,406.87 218,563.86
4 92 0 151,480.18 67,083.68 218,563.86
5 120 0 136,203.27 82,360.59 218,563.86
6 151 0 149,957.07 68,606.78 218,563.86
7 181 0 144,443.08 74,120.78 218,563.86
8 212 0 148,502.43 70,061.43 218,563.86
9 242 0 143,021.01 75,542.85 218,563.86
10 273 0 147,018.46 71,545.40 218,563.86
11 304 0 146,289.29 72,274.57 218,563.86
12 334 0 140,857.43 77,706.43 218,563.86
13 365 45,000 144,760.71 28,803.15 218,563.86
14 395 0 139,806.93 78,756.93 218,563.86
15 426 0 143,664.48 74,899.37 218,563.86
16 457 0 142,901.12 75,662.73 218,563.86
17 485 0 128,375.47 90,188.38 218,563.86
18 516 0 141,210.81 77,353.05 218,563.86
19 546 0 135,892.69 82,671.17 218,563.86
... 218,563.86
119 3591 0 6,550.14 212,013.72 218,563.86
120 3621 0 4,247.75 214,316.10 218,563.86
121 3652 0 2,205.08 216,358.78 218,563.86
Total 555,000 10,822,663 15,000,000 26,377,663
27.
Example 14: Mortgage loan in dram, non-equal
27.1. Loan conditions Amount: AMD 15,000,000
Nominal interest rate: 12%
Repayment: the principal amount is equal, but the interests are non-equal.
Maturity: 120 months
Other payments:
Fee for processing the request — AMD 10,000
pledge appraisal fee — AMD 20,000
lump-sum fee for providing the loan —75,000
cadastre statement fee — AMD 10,000
fee for notarial services — AMD 15,000
insurance — AMD 45,000 per year
27.2. Calculation N=121, of which one payment is the payment at the moment of receiving the loan and the other 120 are the payments of the principal amount and interests.
The fees that are payable by the consumer, regardless of whether the property is acquired with or without loan (for example, cadastre fee or notary fee) shall not be included in the AAIR calculation.
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =10,000+20,000+75,000+45,000=AMD 150,000
i=13.50%
(AAIR=0.1350*100=13.50%)
27.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 150,000 0 0 150,000
2 30 0 147,945.21 125,000.00 272,945.21
3 61 0 151,602.74 125,000.00 276,602.74
4 92 0 150,328.77 125,000.00 275,328.77
5 120 0 134,630.14 125,000.00 259,630.14
6 151 0 147,780.82 125,000.00 272,780.82
7 181 0 141,780.82 125,000.00 266,780.82
8 212 0 145,232.88 125,000.00 270,232.88
9 242 0 139,315.07 125,000.00 264,315.07
10 273 0 142,684.93 125,000.00 267,684.93
11 304 0 141,410.96 125,000.00 266,410.96
12 334 0 135,616.44 125,000.00 260,616.44
13 365 45,000 138,863.01 125,000.00 308,863.01
14 395 0 133,150.68 125,000.00 258,150.68
15 426 0 136,315.07 125,000.00 261,315.07
16 457 0 135,041.10 125,000.00 260,041.10
17 485 0 120,821.92 125,000.00 245,821.92
18 516 0 132,493.15 125,000.00 257,493.15
19 546 0 126,986.30 125,000.00 251,986.30
...
119 3591 0 3,821.92 125,000.00 128,821.92
120 3621 0 2,465.75 125,000.00 127,465.75
121 3652 0 1,273.97 125,000.00 126,273.97
Total 555,000 9,076,603 15,000,000 24,631,603
28.
Example 15: Mortgage loan in foreign currency, with fixed interest rate
28.1. Loan conditions Amount: USD 40,000
Nominal interest rate: 9%
Repayment: monthly, equal
Maturity: 120 months
Other payments:
Fee for processing the request — AMD 10,000
pledge appraisal fee — AMD 20,000
lump-sum fee for provision of the loan in the amount of 1% of the principal amount (at the moment of conclusion)
cadastre statement fee — AMD 10,000
fee for notarial services — AMD 15,000
insurance — AMD 45,000 per year
The Central Bank settlement exchange rate of the USD is AMD 475
28.2. Calculation Taking into account the conditions of the loan, as well as the fact that the values expressed in foreign currency are converted at the settlement rate of the Central Bank on the day of providing (extending) the loan, we will get the following indicators:
Amount of loan provided — 40,000*475=AMD 19,000,000
Lump-sum fee for providing the loan — 40,000*1/100*475= AMD 190,000
The fees that are payable by the consumer, regardless of whether the property is acquired with or without loan (for example, cadastre fee or notary fee) shall not be included in the AAIR calculation.
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =10,000+20,000+190,000+45,000=AMD 265,000
i=10,1%
(AAIR=0.101*100=10.1%)
28.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 265,000 0 0 265,000
2 30 0 140,547.95 103,508.92 244,056.86
3 61 0 144,441.67 99,615.19 244,056.86
4 92 0 143,680.23 100,376.63 244,056.86
5 120 0 129,082.68 114,974.18 244,056.86
6 151 0 142,034.12 102,022.74 244,056.86
7 181 0 136,697.69 107,359.17 244,056.86
8 212 0 140,433.64 103,623.22 244,056.86
9 242 0 135,137.00 108,919.86 244,056.86
10 273 0 138,809.00 105,247.86 244,056.86
11 304 0 138,004.50 106,052.36 244,056.86
12 334 0 132,768.25 111,288.62 244,056.86
13 365 45,000 136,343.18 62,713.68 244,056.86
14 395 0 131,481.11 112,575.76 244,056.86
... 244,056.86
119 3591 0 5,513.01 238,543.85 244,056.86
120 3621 0 3,570.60 240,486.26 244,056.86
121 3652 0 1,851.38 242,205.48 244,056.86
Total 670,000 9,881,823 19,000,000 29,551,823
29.
Example 16: Mortgage loan in foreign currency, with floating interest rate
29.1. Loan conditions Amount: USD 40,000
Nominal interest rate: 7% + 1 year LIBOR interest rate which is 3% at the moment of provision
Repayment: monthly, equal
Maturity: 120 months
Other payments:
Fee for processing the request — AMD 10,000
pledge appraisal fee — AMD 20,000
lump-sum fee for provision of the loan in the amount of 1% of the principal amount (at the moment of conclusion)
cadastre statement fee — AMD 10,000
insurance — AMD 45,000 per year
The Central Bank settlement exchange rate of the USD is AMD 475
29.2. Calculation Taking into account the conditions of the loan, as well as the fact that the values expressed in foreign currency are converted at the settlement rate of the Central Bank on the day of providing (extending) the loan, we will get the following indicators:
Amount of loan provided—
40,000*475=AMD 19,000,000;
Lump-sum fee for providing the loan —
40,000*1/100*475= AMD190,000.
The fees that are payable by the consumer, regardless of whether the property is acquired with or without loan (for example, cadastre fee or notary fee) shall not be included in the AAIR calculation.
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =10,000+20,000+190,000+45,000=AMD 265,000
i=11,19%
(AAIR=0.1119*100=11.19%)
Suppose the interest rate has changed as follows:
● 10% for months 1-60
● 13% for months 61-120
If the creditor requests to calculate and provide thereto a new AAIR in the 110th month, it will be 11.86%.
29.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 265,000 0 0 265,000
2 30 0 156,164.38 98,291.04 254,455.42
3 61 0 160,535.06 93,920.36 254,455.42
4 92 0 159,737.38 94,718.04 254,455.42
5 120 0 143,552.32 110,903.10 254,455.42
6 151 0 157,991.01 96,464.41 254,455.42
7 181 0 152,101.67 102,353.75 254,455.42
8 212 0 156,302.42 98,153.00 254,455.42
9 242 0 150,453.67 104,001.75 254,455.42
10 273 0 154,585.49 99,869.93 254,455.42
11 304 0 153,737.28 100,718.14 254,455.42
12 334 0 147,950.19 106,505.23 254,455.42
13 365 45,000 151,977.30 57,478.12 254,455.42
14 395 146,602.38 107,853.04 254,455.42
...
119 3591 0 8,824.98 263,444.47 272,269.44
120 3621 0 5,725.42 266,544.03 272,269.44
121 3652 0 2,973.32 269,296.12 272,269.44
Total 670,000 12,198,492 19,000,000 31,868,492
30.
Example 13: Programme mortgage loan in dram, with fixed interest rate
30.1. Loan conditions Amount: AMD 15,000,000
Nominal interest rate: 12%, of which 4% is subsidised
Repayment: monthly, equal
Maturity: 120 months
Other payments:
Fee for processing the request — AMD 10,000
pledge appraisal fee — AMD 20,000
cadastre statement fee — AMD 10,000
fee for notarial services — AMD 15,000
lump-sum fee for providing the loan —75,000
insurance — AMD 45,000 per year
30.2. Calculation N=121, of which one payment is the payment at the moment of receiving the credit and the other 120 are the payments of the principal amount and interests.
8% is taken as the annual nominal interest rate of the credit in the calculation of the AAIR, as 4% of the 12% is subsidised.
The fees that are payable by the consumer, regardless of whether the property is acquired with or without loan (for example, cadastre fee or notary fee) shall not be included in the AAIR calculation.
Other payments made at the moment of receiving the credit (K1) turn out to be:
K1 =10,000+20,000+75,000+45,000=AMD 150,000
i=9.01%
(AAIR=0.0901*100=9.01%)
30.3. Repayment Schedule
Repayment frequency — n Number of days from receiving the credit to the subsequent repayment — Dn Other fees Interest amounts repaid Repayments of the principal amount Subsequent total repayment amount — Kn
1 0 150,000 0 0 150,000
2 30 0 98,630.14 86,735.58 185,365.71
3 61 0 101,328.48 84,037.23 185,365.71
4 92 0 100,757.49 84,608.22 185,365.71
5 120 0 90,487.52 94,878.19 185,365.71
6 151 0 99,537.96 85,827.75 185,365.71
7 181 0 95,762.72 89,603.00 185,365.71
8 212 0 98,346.00 87,019.72 185,365.71
9 242 0 94,601.36 90,764.35 185,365.71
10 273 0 97,138.04 88,227.67 185,365.71
11 304 0 96,538.57 88,827.14 185,365.71
12 334 0 92,840.36 92,525.35 185,365.71
13 365 45,000 95,306.37 45,059.34 185,365.71
14 395 0 91,935.69 93,430.02 185,365.71
15 426 0 94,365.40 91,000.31 185,365.71
16 457 0 93,747.10 91,618.61 185,365.71
17 485 0 84,112.54 101,253.18 185,365.71
18 516 0 92,436.63 92,929.09 185,365.71
19 546 0 88,843.76 96,521.95 185,365.71
... 185,365.71
119 3591 0 3,728.18 181,637.53 185,365.71
120 3621 0 2,413.59 182,952.12 185,365.71
121 3652 0 1,250.97 184,114.74 185,365.71
Total 555,000 6,838,886 15,000,000 22,393,886
(Annex edited by No 2-N of 17 January 2020)
Translation published on a joint site 18 december 2023