EIR-is the total cost of loan for the conusmer, expressed as an annual perentage of the loan value and
calculated in accordance with Article 6 and Annex. 1 of the Regulation no. 59 "On the transparency of
banking products and financial services"
EIR is calculated based on the nominal interest rate (monthly due interest), total card limit and annual card
commission, taking into consideration that this commission is 0 for the first year. During calculation is
assumed the immediate disbursement and use of the card limit, no further use and limit circulations,monthly
payment for minimum for minimum obligation and complete settlement for 2 years (24 months) *.
EIR is calculated according to the formula:
m
-tk
n
-tp
Σ Kk (1+i) = Σ Pp (1+i)
k=1
p=1
where m is the number of periods of loan circulation, p is the continuously number periods for loan
circulation, Kk is the actual loan (cash flow) available to the customer for the period k, tk is the interval
expressed in years and fractions of a year between the date of delivery of the limit of the card and the date of
each movement of this limit, n is the number the periods of payment by the customer, p is the continuous
number periods of payments for loan repayment, Kp is the value customer expenses paid for the period p, tp is
the interval expressed in years and fractions of a year between the date of disbursement of the loan and the date
of each payment period and i is EIR.
Example:
Total Card Limit
Annual Commission for
first year
Annual Commission for
second year
EIR
Prima
150,000 LEK
0
Prima Gold
150,000 LEK
0
1,500 LEK
3,000 LEK
21.93%
24.62%
EIR is calculated nearly in similar values even in terms of turnover and further use of card limit
If we take into conisderation even the fact that annual commision is returning as bonus, EIR is calculated even
in lower values.
If customer is making regular payment of total obligation, EIR comes down to the minimum value ~ 1%.