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Effective Interest Calculator

Calculate APR for known loan payments under Section 16 PAngV, including discount and mandatory costs; simplified IRR remains available.

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Annual percentage rate under PAngVCalculate a known payment schedule and mandatory costs

Loan amount (nominal)

€

Agreed loan sum that must be repaid.

Disbursement

Percentage of loan amount that is disbursed. 100% = full disbursement, 96% = 4% disagio.

or: Disbursement amount

€

Alternatively: exact amount disbursed (overrides percentage field).

Nominal interest p.a.

Annual nominal interest rate according to loan agreement.

Duration (years)

Loan term in full years.

Duration (months)

Additional months (0-11).

Payment frequency

Disbursement date

First payment date

One-time mandatory costs

€

Include only costs required for this loan.

Mandatory cost per payment

€

Additional required cost with every payment.

Contractual payment (optional)

€

Without an entry, an annuity is calculated.

Additional final payment

€

Residual balance due with the last payment.

Load example

For illustration only – your own calculation is what counts.

Explanation

How Effective Interest Calculator works

The PAngV mode solves the annual present-value equation for a known fixed payment schedule. The previous simplified IRR calculation remains a separate mode.

Basic principle (internal rate of return)Net disbursement = sum((payment + monthly fees) / (1 + r_eff/12)^t) for t = 1..n

The effective interest rate is the rate at which the present value of all repayments (loan installment plus recurring fees) exactly equals the actual net disbursement. It is determined iteratively (numerically).

The higher the ancillary costs (fees, disagio) and the shorter the term, the more the effective rate deviates from the nominal rate. With long terms, one-time costs are spread over more periods and the difference decreases.

Knowledge

Understanding and applying the effective interest rate

The PAngV mode solves the annual present-value equation for a known fixed payment schedule. The previous simplified IRR calculation remains a separate mode.

Nominal rate: Pure interest rate without ancillary costs — only part of the total cost.
Disagio: Reduced disbursement increases effective costs because less money is available.
One-time fees: Processing or brokerage costs reduce net disbursement.
Recurring fees: Monthly account or insurance costs increase the effective burden.
PAngV: German Price Indication Regulation mandates uniform effective interest calculation.
Rule of thumb: The shorter the term, the more one-time costs affect the effective rate.

Practice

Practical examples

For illustration only – your own calculation is what counts.

PAngV model: fixed instalment loan

EUR 10,000 is paid out on 1 January 2026. Twelve monthly payments start on 1 February at 6% borrowing rate and no mandatory costs. What annual rate follows from this schedule?

Result: The calculated annual percentage rate is 6.17%. The exact value depends on the payment dates.

Loan without ancillary costs (reference case)

A loan of EUR 10,000 with 5% nominal interest and 5-year term, full disbursement, no fees. The effective rate must equal the nominal rate.

Result: Without ancillary costs, the effective rate is identical to the nominal rate: 5.0000%. The monthly payment is EUR 188.71.

Loan with 4% disagio

A loan of EUR 50,000 with 4% nominal interest and 96% disbursement (4% disagio). Term: 15 years. How much does the missing EUR 2,000 increase the effective rate?

Result: The engine's periodic IRR approximation is 4.6077% with a monthly payment of EUR 369.84.

Loan with one-time processing fee

EUR 10,000 loan, 5% nominal interest, 5-year term, EUR 200 one-time processing fee. How does the fee affect the effective rate?

Result: With the fee, the engine's periodic IRR approximation is 5.8354% instead of 5.0000%.

Loan with monthly account fee

EUR 20,000 loan, 4.5% nominal interest, 8-year term, EUR 3.50 monthly account fee. How much more expensive does the loan really become?

Result: The monthly fee totals EUR 336 and raises the periodic IRR approximation from 4.5000% to 4.8702%.

Mortgage with disagio and fees

Mortgage of EUR 300,000 with 3.2% nominal interest, 98% disbursement, EUR 1,500 one-time fees, and EUR 5 monthly account fee. Term: 25 years.

Result: At EUR 292,500 net disbursement and EUR 1,500 recurring fees, the engine's periodic IRR approximation is 3.4663% instead of 3.2000%.

Notes

Common mistakes

Comparing loan offers only by nominal rate
The nominal rate is only part of the total cost. Two loans with the same nominal rate can have completely different effective rates due to different fees and disagio. Always use the annual percentage rate as comparison metric.
Always use the annual percentage rate as comparison metric, never the nominal rate alone.
Not including hidden fees in the comparison
Processing fees, account fees, brokerage commissions, and residual debt insurance significantly increase actual loan costs. Some providers attract with low nominal rates and compensate through high ancillary costs.
PAngV mode includes the disbursement date, payment dates, discount, one-time mandatory costs and recurring mandatory costs.
Underestimating the term effect on the effective rate
One-time fees have a much stronger impact on the effective rate with short terms (e.g., 1 year) than with long terms (e.g., 20 years). A EUR 500 fee on a EUR 10,000 loan raises the effective rate by approx. 5 percentage points for 1 year, but only by approx. 0.5 percentage points for 10 years.
Pay special attention to one-time fees with short terms — they disproportionately distort the effective rate.
Misunderstanding disagio as a discount
A disagio is not a price reduction but a prepaid interest component. With 96% disbursement, the borrower receives less money but must repay the full amount. The disagio makes the loan more expensive — it only optically lowers the nominal rate.
Enter the disbursement percentage correctly in the effective interest calculator to see the true loan price.
Using the effective interest rate as the only decision criterion
The provider’s full disclosure remains decisive for a specific offer. Check term, prepayment and other contract conditions too.
Compare the annual percentage rate disclosed by the provider under PAngV and additionally consider contract terms, flexibility and services.

FAQ

Frequently asked questions

What is the effective interest rate?

The PAngV mode solves the annual present-value equation for a known fixed payment schedule. The previous simplified IRR calculation remains a separate mode.

What is the difference between nominal and effective interest rate?

The nominal rate describes contractual interest; the annual percentage rate includes known payments and mandatory costs.

Why must banks disclose the effective interest rate?

The German Price Indication Regulation (PAngV) requires banks to state the annual percentage rate for loan offers. This allows consumers to compare different offers fairly, even when nominal rates, fees, and disbursement conditions differ.

What is included in the effective interest calculation?

PAngV mode includes the disbursement date, payment dates, discount, one-time mandatory costs and recurring mandatory costs.

What is a disagio?

A disagio (also called discount or deduction) means the bank disburses less than the agreed loan amount. With 4% disagio, only EUR 96,000 of EUR 100,000 is paid out, but EUR 100,000 must be repaid. The disagio is a prepaid interest component and increases the effective rate.

What is the difference between one-time and recurring fees?

One-time fees (e.g., processing fee, brokerage commission) are charged only at loan closing and reduce the net disbursement. Recurring fees (e.g., account maintenance fee) are charged monthly and increase the effective monthly burden. Both raise the effective rate — short-term loans are affected more by one-time fees than long-term ones.

How accurate is this calculator compared to PAngV?

PAngV mode uses the annual equation and time intervals in the Annex to Section 16 PAngV. IRR mode still multiplies a monthly internal rate by twelve.

How do I compare loan offers correctly?

The provider’s full disclosure remains decisive for a specific offer. Check term, prepayment and other contract conditions too.

Is the calculator result binding?

Multiple drawdowns, variable rates and unknown contract terms are not modeled; further Annex assumptions may apply to them.

Does the APR apply for the entire loan term?

For fixed-term installment loans, the disclosed APR is based on the agreed contractual period. If a mortgage's interest lock-in ends before full repayment, later financing conditions remain unknown and statutory assumptions may be required.

Why do the online calculator and bank offer differ?

Multiple drawdowns, variable rates and unknown contract terms are not modeled; further Annex assumptions may apply to them.

What does the APR not show?

The annual percentage rate reflects the costs included under PAngV and the agreed payment schedule. It does not predict later refinancing or exchange-rate changes, tax effects, or the value of flexible prepayment. Whether a specific cost must be included depends on the contract.

Limits

Limitations

PAngV mode uses the annual equation and time intervals in the Annex to Section 16 PAngV. IRR mode still multiplies a monthly internal rate by twelve.
No prepayments modeled: The calculator assumes a uniform repayment schedule. Prepayment options change the actual effective rate.
No interest lock-in period considered: For mortgage loans, the interest lock-in often ends before full repayment. Refinancing risks are not modeled.
Optional residual debt insurance not included: RSV costs significantly increase loan costs but are only included in the effective rate when they are a loan condition.

Sources

Sources and references

Preisangabenverordnung (PAngV) — Effektiver JahreszinsBundesministerium der Justiz
Legal regulations for calculating and disclosing the annual percentage rate for consumer loans and mortgage loans.
View sourceRetrieved: 09/28/2026 · Verified on: 09/28/2026 · Primary source
Anlage zu § 16 PAngV — Berechnung des effektiven JahreszinsesBundesministerium der Justiz
Official present-value equation, time conventions, rounding, and assumptions for special loans.
View sourceRetrieved: 09/28/2026 · Verified on: 09/28/2026 · Primary source
§ 491 BGB — VerbraucherdarlehensvertragBundesministerium der Justiz
Pre-contractual information obligations for consumer loans, including the obligation to state the annual percentage rate.
View sourceRetrieved: 09/28/2026 · Verified on: 09/28/2026 · Primary source
EU-Richtlinie 2008/48/EG — VerbraucherkreditrichtlinieEuropäische Union
EU-wide harmonization of effective interest calculation using the internal rate of return (IRR) method. Basis for the German PAngV.
View sourceRetrieved: 09/28/2026 · Verified on: 09/28/2026 · Primary source
BaFin — Aufsicht über das KreditwesenBundesanstalt für Finanzdienstleistungsaufsicht (BaFin)
Supervisory requirements for transparent pricing of credit products.
View sourceRetrieved: 09/28/2026 · Verified on: 09/28/2026 · Primary source
Verbraucherzentrale — Kreditkosten verstehenVerbraucherzentrale Bundesverband
Practical explanations of effective interest calculation and tips for loan comparison for consumers.
View sourceRetrieved: 09/28/2026 · Verified on: 09/28/2026

Related calculators

Effective Interest Calculator

Enter values

How Effective Interest Calculator works

Understanding and applying the effective interest rate

Practical examples

PAngV model: fixed instalment loan

Loan without ancillary costs (reference case)

Loan with 4% disagio

Loan with one-time processing fee

Loan with monthly account fee

Mortgage with disagio and fees

Common mistakes

Frequently asked questions

Limitations

Sources and references

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