Wpływ prowizji na wartość RRSO na przykładzie pożyczek spłacanych jednorazowo
Impact of charges on the APR level on the example of loans repaid in a lump sum

Summary/Abstract: The aim of the study was to analyze and assess whether a change in charges causes the same change in the annual percentage rate (APR) level, in the case of short-term and long-term loans and with fee charged in advance and in arrears, regardless of the initial level of the charge. It turns out not to be the case. This is (1) the effect of multiple calculation of charges in the APR for short-term loans (as a result of which the APR overestimates their true cost) and charging only part of it in the case of long-term loans (as a result of which the APR underestimates their cost), and (2) the effect of multiple capitalization of costs (as a result of applying the effective rate in the APR). That causes the strengthening of the overestimation or underestimation of the cost – with varying strength depending on the charge collection method and the loan period, and, what is crucial, also on the initial amount of the charge. This means that APR calculation formula is internally inconsistent. It distorts and falsifies the true cost of debt with varying degrees of strength depending on the combination of 3 parameters: loan period, charge collection method, and the initial amount of the charge. Therefore, the APR does not show the true cost of loans repaid in a lump sum.

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