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Annual Percentage Rate

The effective annual interest rate is a crucial factor when evaluating credit offers as it encompasses not only the nominal interest rates but also all associated costs. This comprehensive metric allows consumers and investors to objectively compare various credit offers and understand the actual total costs of a loan.

In Switzerland, the effective annual interest rate is legally regulated, ensuring a high level of transparency and comparability of credit offers across different platforms. Whether a loan originates from a traditional bank or a crowdlending platform, all mandatory cost components must be incorporated into the effective annual interest rate.

This legal regulation is of significant importance as it provides consumers and investors with a clear overview of the true costs of a loan, without hidden fees or additional charges. This empowers them to make informed decisions and select the credit offer that best suits their needs.

Moreover, the effective annual interest rate encourages broad diversification of credit investments. By spreading investments across various credit projects, investors can minimize risk and increase the potential for stable returns.

When choosing a credit offer, considering not only the nominal interest rate but also the effective annual interest rate is crucial to gain a comprehensive understanding of the actual costs and comparability of the offers.