The effective interest rate on a loan
Updated: 2026-09 · ArmFinCredit
Two loans with the same nominal rate can cost differently: fees, insurance and the schedule decide. The effective rate turns all of that into one number.
Nominal vs effective
The nominal rate is interest on the remaining balance. The effective (actual) annual rate includes every mandatory payment: origination fee, account service, mandatory insurance, valuation. Banks in Armenia must disclose it.
Why it is higher
If AMD 100,000 is withheld as a fee on an AMD 5,000,000 loan, you actually receive less but pay as if for the full amount. So the real price of the loan is above the nominal rate — sometimes by several points.
In the calculator’s Advanced tab you can enter the fee and monthly insurance to see the effective rate (APR).
How to compare loans
Compare by the effective rate and the total overpayment for the same amount and term. Check whether the rate is fixed: a floating rate can rise.
You can compare up to four offers side by side on the loan comparison page.
What else to check
Early repayment terms, late payment penalties, collateral and guarantor requirements, and approval time. The lowest rate is not always the best loan.