Not everyone understands what the full cost of a Sberbank loan means, how it is calculated and why it is needed. When receiving all types of loans, in addition to the conditions offered by banks, it is important to refer to this parameter. It helps you compare offers and choose the more profitable one. The rules for its calculation are set out in the legal document Federal Law-N 353 dated 03/07/18.

What is the total cost of the loan?

The total cost of the installment plan implies the totality of the expected installments that the borrower undertakes to pay. It is calculated as a percentage, and sometimes as a monetary value. The assigned monthly and other fees are specified in detail in the agreement between the client and the financial company.

It is not easy for an ordinary consumer to understand what it is the first time. For example, on the Sberbank website there is an advertisement that the bank reduces the cost to 11.9% per annum for those who apply for a loan through the Sberbank Online service. But if you go to the website section, you can see information that the minimum value for the full cost of consumer loans is 12.51%. There is also information about the maximum value – 20.94%. It becomes unclear where all this information came from and what it means.

This concept is not synonymous with percentage. Her client pays for using the lender's funds. It is accrued for a certain period. There is also a whole list of payments, some of which are legally required to be included in the payment. The other part, due to certain circumstances, has the right not to be considered when calculating this value.

At the legislative level, there is a list of payments that must be taken into account when determining the full cost of borrowed funds. Financial companies are required to fully disclose to the consumer all the nuances of providing a loan, including the prices at which the calculation was made.

Organizations take into account the following consumer costs when calculating the full installment plan:

1. Closing the debt under the contract. It is calculated using a formula that can be found in regulatory documents.
2. Repayment of interest, which is established by the terms of the agreement. The money issued is estimated as an overpayment - the amount that will be returned by the buyer in excess of the principal debt.
3. Payments that depend on the disbursement of loan money. For example, in order to avoid possible risks in large transactions, you have to resort to a letter of credit payment system - opening a special account or placing cash in an individual safe.
4. For a plastic card.
5. Expenses for services to third-party partner companies. These include compensation for insurance, the work of an appraiser, a notary, etc. Services of transactions through other organizations are also paid. An exception will be the case with car lending - CASCO is not included in the total debt.
6. Payment for insurance, where the recipient of the benefit is not the borrower or relatives, but the company itself. For example, in the event of an insured event related to the life and health of the borrower, the insurance company is obliged to transfer the entire cost to the lender.
7. Additional types of insurance, depending on the conclusion of which the lender offers different conditions for issuing cash. For example, companies can reduce interest rates if the consumer agrees to enter into such an insurance contract, or, conversely, increase them if they refuse.

If the contract is renewed when the insurance company changes, the full cost of the debt changes. The company must notify the buyer of this in advance.

There are payments that are officially allowed not to be taken into account when calculating the full cost of the installment plan. It turns out that the full price of the loan is a relative unit. All that remains is to rely on the integrity of the financial institution, which first discloses to the consumer all information about spending. You should only contact a reliable lender with a proven reputation.

The Bank reserves the right not to take into account:

1. Fees specified in legal requirements. For example, compulsory motor liability insurance is not included, but in fact it is mandatory.
2. Penalties and penalties for violation of the terms of the agreement. Most often they are associated with late payment. As soon as the creditor finds out, the statute of limitations begins. During this time, the seller may.
3. Various deductions: when withdrawing cash from an ATM, when paying early, etc.
4. Cash contributions to insurance companies for .
5. Payment for property protection services, which does not affect the loan price. If you simultaneously insure your life, the rates will be lower than if you take out the same without insurance.

The client has the right to write a refusal to accept insurance within half a month, with a request to return part of the paid funds. In this case, part of the money is lost, because... the service had already been provided before the notice was written.

Regulatory rules on lending do not provide specific information about calculations. There are also no clear boundaries for what should be included in the total cost of the loan. This becomes the reason for the double interpretation of the law. Organizations, taking advantage of this, think in such a way as to have maximum benefit for themselves.

The Central Bank of Russia sets quarterly restrictions with a maximum and minimum price range. This is unprofitable for financial institutions, so they have two solutions: reduce price tags, which will not bring profit, or eliminate additional payments.

Sberbank includes the following in mortgage debt:

• principal with interest;
• , upon registration of which 1% is reduced.

Other types of insurance and property valuation are not added to the total price.

When applying for a loan in the SB of Russia, there are several options for calculating the full price of the obligation. The organization deliberately tries not to take into account other payments. If any insurance is nevertheless included, it is deducted from the total amount.

If you borrow 150,000 rubles from the Security Service of Russia. with insurance of 8,000 rubles, then it will subsequently be included in the total debt. Thus, in fact, the borrower receives 142,000 rubles. instead of the stated amount.

At the stage of document preparation, the client is provided with information about prices. In the contract, the full cost of the installment plan is placed on the 1st page in the upper right corner and is highlighted with frames. The information is printed in the form of readable text, contains specific numbers and their interpretation in capital letters. The area of ​​such a frame in accordance with Federal Law-378 is no less than 5% of the entire page.

If the debt is closed early, the value of the full amount changes. The client can safely obtain this information from the seller in the form of a notification about the full cost of the loan.

How to calculate the total cost of the loan yourself

The formula for finding the full cost of the loan is given in Article 6 of the Federal Law on Lending. In order to be able to count on it, special mathematical knowledge is required. Even bank employees sometimes find it difficult to calculate without a special program.

• PSK = SDP + KDV + P

When calculating the CDV, all expected expenses, both one-time and monthly, are considered for the entire period of the agreement. The overpayment depends on the accrued interest. Numerical data is expressed in monetary terms.

Next, you need to select the type of payment: annuity or. The first means equal fixed payments under the contract. The second type of payment - differentiated - means that contributions will be unequal. As a rule, in the initial period they have a maximum value.

After filling out the fields of the calculator, click the “Calculate” button. The program will give an approximate result.

Once you know the specific data, you can make a simple calculation of the total cost using a formula. For example, there is a loan worth RUB 320,000. Term – 36 months at 16% per annum. There are additional fees: 2% for provision, 1.2% for service.

If you make the same contribution every month, the overpayment will be 85,000.

For issuing money the client will be charged:

• 320 x 2% = 6.4 thousand rubles.

The service cost is:

• (320 + 82) x 1.2% = 4.86 thousand rubles.

Total debt value:

• 320 + 85 + 6.4 + 4.86 = 416.26 thousand rubles.

The calculation is approximate, but it can be used to compare several proposals and choose something with the lowest cost.

How to reduce the cost of a loan

The rules applied by banks for calculating the full cost are not always beneficial for ordinary consumers. Numerous monetary withholdings are placed on top of the underlying obligation.

In this situation, you can try to reduce the total cost of the obligation in several ways:

1. Draw up an agreement with the lowest prices.
2. After registering the contract, the client can try if it really does not help reduce repayments. If it reduces, compare and choose the more advantageous side. In the absence of the possibility of refusal, it is necessary to carefully select an insurance organization, checking its reliability and the quality of the services offered.
3. If possible, use a differentiated payment scheme. It involves different monthly payments at the discretion of the borrower. When you make a larger contribution, the principal debt is reduced, and the rest is repaid gradually. At the same time, the monthly fee is gradually reduced. A differentiated fee allows you to reduce the final overpayment by installments.
4. Choose a consumer loan where there is no withholding.
5. Avoid violations of the terms of the agreement, in particular, delays in depositing money into the account.
6. If possible, choose a loan with a shorter term. The shorter the term, the lower the total cost of the installment plan will be.
7. Use a money company through which the borrower receives his salary. Some money product sellers offer profitable programs to their customers.

You should not focus only on reducing the cost of the obligation. When refusing insurance, it is necessary to consciously analyze the possible risks that it can protect against in the event of an unforeseen situation.

Financial institutions include additional payments in the cost of the loan in different ways. The computational process for paying in full installments is quite difficult and confusing. For this reason, it can be interpreted ambiguously. This makes it difficult to correctly compare different product options. Therefore, it is important to learn how to make calculations yourself and be able to choose among the more reliable sellers.

You can independently calculate the full price of borrowed money using the standard formula specified in Art. 6 Federal Law-N 353. You can choose a more advantageous offer in another way. You need to decide on its full size and actual repayment period, analyze the options offered by various banks, then calculate the cost of the overpayment for all offers. The amount of funds that will be returned to the seller in excess of the principal debt determines its full cost.

Total loan cost

As you have already seen, comparing loans is a rather labor-intensive and time-consuming undertaking. In addition, in order to compare conditions, for example, on mortgage loans from different banks, you need to have a fairly good understanding of not only lending, but also insurance, and also be a good lawyer. To simplify the procedure, the Central Bank of Russia introduced the concept of “full cost of credit” (previously the concept of “effective interest rate” was introduced). For deposits, the concept of the total cost of the deposit can be used.

Formula for calculating the total cost of the loan

as follows:

• d i - date of the i-th payment;
• d 0 - date of initial payment - is the date of transfer of funds to the borrower;
• n - number of payments;
• DP i - the amount of the i-th payment under the loan agreement. multidirectional payments are reflected with different mathematical signs. Thus, the payment of loan funds to the borrower is reflected with a minus sign, the return of funds and commission payments are reflected with a positive sign;
• PSK - the total cost of the loan, reflected in % per annum

When determining the full cost of the loan, all payments related to the issuance of the loan (commission for issuance, consideration of the application, etc.) are reflected in the initial payment.

What is included in calculating the total cost of the loan:

1. Exactly known payments under the loan agreement, which are payments related to the conclusion and execution of the loan agreement:

to repay the principal amount of the loan;

on payment of interest on the loan;

fees and commissions for drawing up a loan agreement, considering a loan application, issuing loan funds, opening and maintaining an account;

commissions for cash settlement and operational services

if the payment is made on a loan on a bank card - commissions for issuing and annual servicing of credit cards

2. Payments to third parties, if the obligation to pay these payments arises from the conclusion of a loan agreement

• insurance of real estate or vehicles
• payments to notary offices and notaries
• valuation of property pledged as collateral

The calculation of the full cost of the loan does not include

payments by the borrower that do not arise from the loan agreement, but from the requirements of Russian legislation. For example, to apply for a car loan, this will be compulsory motor liability insurance, which must be concluded in any case;

payments related to the borrower’s failure to comply with the terms of the loan agreement. For example, late payments;

the borrower's payments on the loan, which depend on the borrower's decision or on his behavior. For example, a commission for early repayment, a commission for receiving funds in cash, a fee for providing information about the status of the debt.

If the loan agreement provides for different types of loan accruals depending on the borrower’s decision, the calculation of the full loan amount is calculated based on the maximum possible loan amount (overdaft limit), loan term, and equal payments under the loan agreement.

Calculation example:

Basic loan terms:

date	Interest payment	Principal payment	Commissions and other payments	Remainder debt at the end months
01.01.2011		- 50 000,00
31.01.2011	833,33	4 166,67	1 500,00	45 833,33
28.02.2011	763,89	4 166,67	500,00	41 666,67
31.03.2011	694,44	4 166,67	500,00	37 500,00
30.04.2011	625,00	4 166,67	500,00	33 333,33
31.05.2011	555,56	4 166,67	500,00	29 166,67
30.06.2011	486,11	4 166,67	500,00	25 000,00
31.07.2011	416,67	4 166,67	500,00	20 833,33
31.08.2011	347,22	4 166,67	500,00	16 666,67
30.09.2011	277,78	4 166,67	500,00	12 500,00
31.10.2011	208,33	4 166,67	500,00	8 333,33
30.11.2011	138,89	4 166,67	500,00	4 166,67
31.12.2011	69,44	4 166,67	500,00	0,00
Total	5 416,67	50 000,00	7 000,00	0,00

In this example, the total cost of the loan was 55,49 %

As you can see, the total cost of the loan may differ greatly from the interest rate stated and advertised by the bank. In addition, it should not be confused with such a concept as an increase in the cost of a loan, which largely depends not on the interest rate, but on the loan term.

The full cost of the loan is quite difficult to calculate using a calculator, but the Excel program can be of great help in calculating it. In spreadsheets, this calculation is implemented using the IRR (internal rate of return) function. If you need to compare several programs, download

Content

Banks, private and public, are trying to attract customers with their loan offers. For this reason, you can often see attractive loan rates in advertisements, but in reality the overpayment is a large amount. The total cost of the loan is a formula, the decoding of which includes, in addition to the interest rate, all additional payments on a consumer or any other loan.

What is the total cost of the loan?

Having taken advantage of a bank’s offer to borrow money from it, you should always know that interest is just a fee for using money. In addition, there are additional commissions, which are also added to the monthly payments. The entire sum of these components is called the full interest rate. PSK, an abbreviation for this indicator, is the main value that you need to focus on when choosing a loan. Information on the full cost of the loan is provided in annual percentages and is indicated in the upper right corner of the bank loan agreement.

Previously, the concept of effective interest rate was used. It was calculated using the compound interest formula, which included the borrower’s lost income from the possible investment of the amount of interest payments on the loan during the loan period at the same interest rate as on the loan. For this reason, even in the absence of additional payments, the rate was higher than the nominal rate. It did not reflect the borrower’s real costs of servicing the debt, which the bank client learned about only when it came time to pay for the loan.

Legal regulation

Seeing this state of affairs, the Central Bank took the side of ordinary people and obliged all financial institutions to inform clients of the full cost of the loan. In 2008, the Bank of Russia issued an instruction “On the procedure for calculating and communicating to the individual borrower the full cost of the loan.” After the federal law “On Consumer Credit (Loan)” came into force, and this happened on July 1, 2014, the value of the full cost of borrowed funds is determined depending on the average market value of the loan established by the Central Bank.

How to find out the loan price

It is noteworthy that in microfinance companies the full cost of the loan is always indicated, and all other payments relate only to penalties and fines for delays and failure to fulfill obligations. In a bank, the main indicator is the interest rate for using a loan; additional payments that relate to the loan are indicated in separate clauses in the contract and additional agreements to it.

Notification of the full cost of the loan

Previously, the PSC indicator could be indicated in the contract, but the value was written there in small print, which was not immediately noticeable. According to federal law, the loan agreement is divided into 2 parts: general and individual conditions. So, in the second part, which has a tabular form, the PSC number must be written in the largest font, which is used in the design. The information is indicated in a frame that must cover at least 5% of the area of ​​the entire sheet on which individual lending conditions are written.

What does the full cost of the loan include?

The maximum possible value of the PSC should not exceed one third of the average market value and is communicated to the borrower without fail. In order to understand where the final PSC figure comes from and why it can sometimes differ from the value in advertising or on the credit institution’s website, you need to know all its components. These include:

• the body of the loan and interest on it;
• application processing fee;
• commissions for processing loan agreements and issuing them;
• interest for opening and annual servicing of a (loan) account or credit card;
• borrower liability insurance;
• collateral assessment and insurance;
• voluntary insurance;
• notarization.

What expenses do not increase the cost of the loan?

In addition to the mandatory payments that are included in the PSC, the borrower may be charged other payments that do not in any way affect the calculation of the effective payment, i.e. full rate:

• fee for non-fulfillment of the contract. This includes all kinds of fines and penalties accrued in connection with late payment of the next payment.
• voluntary payments. These include bank commissions for early repayment of a loan, payments for statements and certificates, restoration of a lost credit card, etc.
• additional fees. Here we are talking about payments that are not related to the contract in any way, but may be mandatory in connection with Russian legislation (for example, an MTPL policy) or initiated by the borrower himself (additional insurance).

How to calculate the total cost of a loan

You can inquire about the PSK formula even before concluding an agreement at a bank branch. It must be provided before signing the agreement. You can calculate it yourself. However, in this case, it is necessary to carefully approach the calculation and not miss a single moment, as this may lead to inaccuracies. Very often, borrowers make serious mistakes by inattentively reading the agreement and omitting certain data.

PSK formula

The full cost of the loan is calculated based on the standards established by the Central Bank of Russia. The formula itself and the calculation algorithm are constantly being improved, therefore, when determining the PSC yourself, you need to apply for the latest relevant data, which are published on the regulator’s website. The latest changes in the methodology were made in connection with the adoption of the law on consumer lending. The UCS size is calculated as follows:

PSC = i × NBP × 100, where

PSK – the total cost of the loan, expressed as a percentage accurate to the third decimal place;

NBP – the number of base periods during a calendar year (according to the Central Bank methodology, one year is equal to 365 days);

i is the interest rate of the base period, which is expressed in decimal form.

(FORMULA)

Σ is “sigma”, which means summation (in this formula - from the first payment to the m-th).

DPk – the amount of the kth monetary payment under the agreement. The loan amount provided to the borrower is indicated with a “-” sign, and repayment payments with a “+” sign.

qk is the number of complete base periods from the moment the loan is issued to the date of the kth payment.

ek – period, which is expressed in shares of the base period, from the end of the qk-th base period to the date of the k-th payment. If the debt is paid strictly according to the repayment schedule, then the value will be zero. In this case, the formula has a simplified form.

m – number of payments.

i is the interest rate of the base period, expressed not as a percentage, but in decimal form.

Calculation algorithm

As can be seen from the calculation formula above, loan rates are calculated simply, with the exception of an indicator called the base period interest rate. This is the most difficult indicator to calculate, which not everyone can cope with. It is physically impossible to calculate multi-year loans. To simplify calculations, you can use online calculators or contact your bank directly. In addition, if you believe that the rate given in the agreement is not accurate, you can send a copy of the agreement to the Central Bank with a request to calculate the correct value.

Full cost of a consumer loan

Before concluding a consumer loan agreement, a bank employee is obliged to inform the borrower about the real cost of the loan, which is often confused with the interest rate. Banks may impose payment for services, for example, Internet banking or SMS notifications, fees for which are charged only with the permission of the borrower. The full cost includes not only the amount of overpayment resulting from accrued interest, but also payment for the following operations:

• consideration of the application;
• issuing a loan;
• issue of a bank card;
• cash withdrawal from the cash register;
• life insurance (optional).

Loan price when buying a car

When buying a car on credit, you should know that four parties are involved in the transaction. Firstly, it is the buyer himself and the bank that finances the purchase, and secondly, the seller, which can be a car dealership or a private person, and the insurance company. It’s worth saying right away that car insurance under the CASCO system is mandatory if the vehicle is transferred to the bank as collateral. Otherwise, the requirement to purchase an insurance policy is illegal.

The full cost of a car loan is calculated taking into account payments on the following items:

• interest charges;
• commissions for transferring funds to the seller’s account;
• collateral insurance;
• additional costs for the borrower associated with notarization of documents.

Cost of mortgage lending

Becoming the owner of your own meters has become easier with the advent of mortgages. Banks offer various lending options - with or without a down payment, with government subsidies or the use of maternity capital - all this will affect the total cost of the loan. In addition to paying interest, the following list of payments must be added to the PSC for the purchase of real estate:

• insurance of collateral (payments by the borrower for insurance of the collateral are included in the calculation of the PIC in an amount proportional to the price of the real estate paid for by the loan, as well as the ratio of the lending period and the insurance period, if the borrowing period is less than the insurance period);
• property valuation;
• notarization of the transaction;
• fee for processing a mortgage loan and transferring funds to the account.

All payments to third parties (notary, insurance and other companies) are made using the tariffs of these organizations. If the agreement provides for a minimum monthly payment, the full cost of the consumer loan is calculated based on this condition.

Example of UCS calculation

• principal loan amount – 340,000 rubles;
• loan term – 24 months;
• rate – 13% per annum;
• loan fee – 2.8% of the total amount;
• commission for issuing cash from the bank's cash desk is 2.5%.

Below is a system with monthly equal payments. The amount of interest accrued for the period will be 72,414 rubles (it can be viewed in the agreement or payment schedule).

Then we calculate the amount of the commission for issuing a loan and cashing out funds:

340,000 × 2.8% = 9,520 rubles;

340,000 × 2.5% = 8,500 rubles.

After this, we sum up all the indicators and get:

340000 + 72414 + 9520 + 8500 = 430434 rubles.

Online calculator

There are a large number of credit calculators available on the Internet that will help you calculate the PSC of standard loans, microloans and even overdrafts. However, you need to understand that due to the fact that each bank uses its own version of rate calculation, the data may differ. In addition, it is necessary to take into account the date of issuance of the loan and its repayment, as well as methods of returning the debt amount: annuity, differentiated or bullet.

Maximum and weighted average value of the total cost of consumer loans

The Central Bank quarterly calculates and publishes the average market value of the PSC for various types of consumer loans. The main thing is that the maximum loan rate does not exceed the weighted average rate by more than a third. Below are the values ​​for the 3rd quarter of 2019, taken from official sources:

	Average market values ​​of the total cost of consumer loans, %	Limit values ​​of the total cost of consumer loans, %
Consumer loans for the purpose of purchasing vehicles while pledging them as collateral
vehicles with a mileage of 0–1000 km
vehicles with a mileage of more than 1000 km
Consumer loans with a borrowing limit (according to the amount of the borrowing limit on the day of signing the agreement)
30,000–100,000 rub.
100,000–300,000 rub.
Over 300,000 rub.
Targeted consumer loans, which are issued by transferring credit funds to a trade and service enterprise as payment for goods (services), if there is a corresponding agreement (POS loans) without collateral
30,000–100,000 rub.
Over 100,000 rub.
More than a year:
30,000–100,000 rub.
Over 100,000 rub.
Non-targeted consumer loans, targeted consumer loans without collateral, consumer loans for debt refinancing (except POS loans)
30,000–100,000 rub.
100,000–300,000 rub.
Over 300,000 rub.
More than a year:
30,000–100,000 rub.
100,000–300,000 rub.
Over 300,000 rub.

What does PSC analysis give to the borrower?

For most people, knowing the APR means understanding how much it will cost them to borrow money, because sometimes an interest-only loan will end up costing the same amount as a loan with a lower interest rate but with additional fees. This even occurs in the same bank, and is created in order to attract more customers. When receiving a loan agreement where the PSC is indicated, or having calculated the indicator yourself, you need to understand that certain nuances may not always be taken into account, such as, for example, early repayment of the principal debt.

How to reduce the cost of a loan

Having received information about the full cost of the loan, sometimes the desire to borrow money disappears. However, if you approach this issue wisely, you can ultimately reduce the figure offered by the bank. There are different ways to do this:

• Early loan repayment. If you partially or completely repay the debt outside of the schedule, this will help reduce the loan burden in the form of unaccrued interest. However, you need to carefully read the contract for penalties, which, on the contrary, can make the loan expensive.
• Issuing money to a bank card. Many lenders offer cash loans, but do not advertise that you will have to pay a certain percentage for issuing them from the cash register. You can ask if it is possible to transfer money to an existing card or account (it can be opened for free) and whether there will be a fee for this. Most likely, this option will be cheaper.

Discuss

When choosing a loan, the borrower studies the loan products of a number of banks and pays attention to promotions of credit institutions offering low interest rates on loans. But few people know that

What is the total cost of the loan?

The total cost of the loan (FLC) is the amount that the client will actually pay to the bank for using the funds, the real price of the loan.

The practice of disclosing the real price of a bank loan did not appear in Russia immediately, but after several years of indignant misunderstanding between credit institutions and borrowers. Psychologically, the price of a loan at 11% per annum for 15 years seems attractive, but in the end, over the entire repayment period, you will have to pay twice as much as was taken. The matter was further complicated by the abundance of commissions, in percentage and with a fixed amount. Some interest was calculated on the balance amount, and others on the original loan amount. In such a situation, it is impossible to determine the real cost of a bank loan without complex calculations.

PSC is expressed in %, but does not coincide with the annual interest rate under the contract. This happens because the price, in addition to interest, may include payments for:

• for processing the application and checking the borrower’s data;
• for registering and maintaining a credit account;
• for issuing bank cards under a loan agreement;
• for operations in the process of processing and maintaining a loan;
• the cost of insurance, if the conclusion of an insurance contract is a condition of the bank for issuing a loan, or determines the amount of rates and commissions on it;
• other client expenses directly related to the issuance of a bank loan, including mandatory payments to third parties.

The full cost of the loan must be calculated before receiving it, because... lending conditions are known in advance.

It is important to consider that the list of expenses included in the CSC is not endless. It cannot be expanded by analogy, in the opinion of one of the parties to the transaction or by the decision of any other persons and organizations.

In the Russian Federation, the law “On consumer credit (loan)” has been in force since 2013. The following year, 2014, a formula for calculating the full cost of a loan became mandatory for banks (we’ll talk about it below).

The following is not included in the PSK:

• Expenses of the borrower made not according to the terms of the loan, but based on legal requirements. This may also apply to certain types of insurance.
• Penalties and additional costs associated with violation of payment discipline.
• Additional costs for servicing the loan, which are a consequence of the client’s choice. An example is an increase in the loan repayment period, which entails a recalculation of the total interest amount.
• Various types of commissions and additional payments for certain methods of loan repayment: in cash, through terminals of other banks, using third-party payment systems.
• Fee for the movement of funds on a bank card issued under a loan agreement.

It follows that the full cost of the loan is not necessarily equal to the amount that the borrower will actually pay the lender. Because During the repayment process the following are possible:

• Delays in payments or early repayment. For the first, a penalty is charged, the second promises a recalculation of interest and a reduction in the total cost of the loan or penalties, if this is provided for in the agreement.
• Changes in loan repayment conditions. This possibility is often specified in the contract, but its occurrence is linked to external circumstances.

These and other circumstances may affect the amount actually paid by the borrower. But if the changes at the time of receiving the loan are not known, or their occurrence does not depend on the lender, then they will not be included in the total cost of the loan.

It is important that the full cost of the loan is known in advance, even before receiving it. If the bank hides information about this, the transaction must be declared invalid, the loan agreement must be terminated, and the funds spent by the client must be returned to him.

For recipients of bank loans, it is the value of the total cost of the loan, and not the interest rate, that should be the criterion for evaluating and comparing different loan products.

How to calculate the total cost of the loan?

The process of calculating the real price of a loan occurs using complex formulas, which for the average consumer take a long time and are not necessary to learn. However, it is useful to understand how this calculation occurs.

First of all, let’s clarify that all payments under the loan are calculated using their own formulas. The principal interest, commissions and other payments are calculated separately (depending on the terms of the agreement - on the initial amount or on the unpaid balance). Then all the resulting figures are summed up to form the total price of the loan.

The formulas below for calculating the cost of a loan will help you find out the payments, and not the principal amount from which interest and other relative values ​​are calculated.

The first of the calculation formulas looks like this:

PSK = i x NBP x 100

here PSC is the total cost of the loan; NBP – number of base periods; i – interest rate in the base period. The base period refers to the period between making mandatory loan payments.

This equation is given in the text of the law “On consumer credit (loan)” and is applied.

The upper part of the fraction, with the letters DK, is the amount of a specific payment. If it is made to the bank, then the amount is accepted with a positive sign, if it is a loan - with a negative sign. The second bracket contains the payment value for the full base period, the first bracket calculates the payment for part of the period. All the results obtained are summed up and ultimately equal 0. Which means the equality of cash flows received by the bank and paid by the borrower. This equation is rarely used for pen and paper calculations. It is more convenient to calculate the UCS by substituting data into an Excel table with formulas already entered.

A simplified formula for calculating the cost of a loan will help you make your own calculation:

It is calculated like this:

• the sum of all loan payments (S) is divided by the amount received from the bank (S0);
• one is subtracted from the division result;
• the resulting number is divided by n - the number of years to repay the loan, and multiplied by 100.

The final value is presented as a percentage. You can compare it with the main interest rate and find out the amount of additional overpayment.

Example of UCS calculation

Let's calculate the total cost of the loan of 1 million rubles for 2 years, at 10% per annum and with an additional commission of 12 thousand per year. Type of payments – annuity, i.e. equal shares in all periods.

An example of calculating the total cost of a loan

	monthly payment	by principal amount	interest payments	commission	unpaid balance

The total loan payment is 1 million 131 thousand 478 rubles 32 kopecks. Let's insert this figure into the simplified formula:

((1 131 478,32/1 000 000)-1)/2*100 = 6,57%

The total cost of the loan was just over 6 and a half percent per year, i.e. 13.15% for two years.

Why doesn't this look like the stated rate of 10% per annum?

Because interest was accrued only on the amount of the unpaid balance, but there was a commission charged on the original loan amount.

This simple example shows how much reality differs from what seems understandable before calculation.

How to calculate the cost of a loan online?

Calculating the full cost of a loan using a general (rather than a simplified) formula manually can be a very lengthy exercise in mathematics. Wasting time here is guaranteed, and the risk of errors is very high. But, to the delight of users, the Internet offers quite a few programs that already have all the formulas needed for calculations, and all that remains is to put your data in the appropriate forms.

In the practice of searching for a loan, calculators will be especially useful with the ability to select a loan that satisfies specified parameters, with the function of searching for a loan for the required amount and with a suitable interest rate. Here is a good example of such a calculator.

What is the total cost of the loan? Why is this indicator needed? What expenses are taken into account when calculating it? Is it possible to calculate the UCS value yourself and how to do it correctly? Why in most cases the calculation will be incorrect? These and many other questions are answered in this article.

If the contract specifies the name of an organization (for example, an appraisal office), then the calculation will be made according to the tariffs of this organization.

It happens that the agreement provides for several third parties. For example, insurers with a choice. Then the calculation will be based on the tariffs of one of them.

If the circle of insurers is not limited to the bank, then they use the tariffs of ANY insurance organization known at the time of calculation.

That is, the value of the indicator written in the contract will be approximate!

Important! The bank must disclose information about the insurance organization whose tariffs were used for the calculation. The bank is also obliged to indicate that when concluding an agreement with another insurer, the value of the PSC will be different.

When taking into account insurance premiums in the PSC indicator, inaccuracy may be associated with other features of the calculation.

The law allows (clause 5 of Article 4 in the Consultant’s comments) to calculate the cost of third-party services according to company tariffs without taking into account the personal characteristics of the borrower.

For example, with car insurance without taking into account age or driving experience and characteristics of the car (performance, make, year of manufacture).

Then the bank is obliged to notify the borrower about this.

When determining the value of the UCS, the tariffs in force at the time of calculation are used. They may change in the future. Then the PSC in the contract will differ from the actual one.

6 The price of insurance when compensation for an insured event is received NOT by the borrower and NOT by his relative.

For example, the PSC will include life and health insurance for the amount of the loan if, upon the occurrence of an insured event, it is not the borrower, but the bank who receives it to repay the loan.

7 Insurance, if it determines the terms of the loan. Including terms, rates and amounts.

For example, Gazprombank for consumer loans indicates that the interest rate increases by 0.5 percentage points if there is no insurance agreement or its validity is terminated. The bank is obliged to take this insurance into account.

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What does the bank not take into account when calculating the PSC?

1 Payments are required by law.

For example, OSAGO is not taken into account when calculating.

2 Payments in case of violation of the contract by the borrower.

For example, penalty for late payment. Moreover, it is impossible to determine in advance whether the borrower will pay on time or late.

3 Payments depending on the borrower's decisions. They must be related to the loan and provided for in the contract.

For example, commission for cashing out funds or fee for early payment.

4 Price of collateral insurance, for example, CASCO.

5 Insurances with conditions:

• registration of insurance does not affect the bank’s credit decision and the loan price;
• the borrower receives additional benefits from these services (for example, with a car loan, the life insurance rate differs from the rate without a loan);
• within 14 days the borrower can refuse these services.

For example: If the borrower's life and health insurance for a car loan meets these conditions, the bank MAY not add the insurance to the calculation.

Important. These exceptions allow banks to vary the terms of loans so as not to take insurance into account.

What's really going on? What do Sberbank and Alfabank take into account as part of PSK?

The law provides general provisions and does not provide guidance on the inclusion of each specific insurance or other additional payment in the calculation. This gives rise to different interpretations and allows creditors to consider what is most profitable for them.

The law provides for many exceptions, which also benefits bankers.

In addition, bankers sometimes do not know how to correctly interpret the article of the law. This is evidenced by requests to the Central Bank from their side asking for clarification.

Click on the picture to enlarge

If the bank’s actions are legal, but not all payments are taken into account in the calculation, there is no point in complaining or writing statements. It is important to understand that your loan is associated with certain expenses. They may not be included in the cost calculation, but will be provided for in the contract - read it carefully.

Make your own calculations taking into account all possible payments. Then surprises will not happen and you will be able to competently manage your own money, planning upcoming expenses.

The PSC is calculated by the bank and the borrower independently.

The bank makes the calculation and notifies the borrower:

1 When posting loan offers on the official website. The bank is obliged to disclose information about the terms of the loan. The UCS range is indicated for each product. This method should be used at the stage of analysis and selection of loan offers.

However, in some cases, you have to look for this information on the website.

For example, Gazprombank, characterizing the terms of loans, at the very end provides a link to the section “Tariffs. Rates. Quotes”, where you can find the range of PSK. But here, too, you first need to select a specific section, then open the file in “pdf” format.

2 When drawing up a loan agreement. Or when the conditions on it change. Here you see the PSC at the time of execution of the contract. You can compare it with your calculations taken from the first point.

The UCS value is indicated on the first page of the contract in the upper right corner in a square frame. The indicator is printed in capital letters in large black font.

3 Upon early repayment of part of the debt.

How to calculate the total cost of the loan yourself?

Why calculate the PSC yourself?

• It is required to obtain the exact value before executing the contract.

The bank's website indicates a range of PSC values, since the rate and other loan conditions differ for different borrowers;

• if you need to compare different loan options;
• if there is no trust in the bank, which does not take everything into account in the calculation. For example, Alfabank takes into account the cost of assessing collateral for a mortgage, but Sberbank does not.

Calculating the total cost is different from calculating the interest rate on a loan. The calculation formula is given in Article 6 of the law.

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The formula is complex, and even a banking specialist does not always understand the meaning and procedure for its calculation. Let's look into it.

The total cost of the loan corresponds to the internal rate of return. In financial mathematics it is designated IRR (internal rate of return).

The value corresponds to the interest rate at which the net present value (NPV) is zero.

What is net present value? First, let's define what income, expenses and net income are.

Let us illustrate the cash flows on a loan in the amount of 120,000 rubles, for a period of 12 months at a rate of 28%.

Provided that the payment is annuity (all payments to repay the loan have the same amount), the value of each payment will be 11,581.72 rubles. These payments are shown in blue and are the income on the loan. Income from the point of view of the bank that will receive these amounts.

The loan expense for the bank is shown in red - this is the loan amount itself, 120,000 rubles.

payment date	payment number	payment type	amount, rub.
10.Jan.18	0	consumption	-120000
10.Feb.18	1	income	11580,72
10.Mar.18	2	income	11580,72
10.Apr.18	3	income	11580,72
10.May.18	4	income	11580,72
10.Jun.18	5	income	11580,72
10.Jul.18	6	income	11580,72
10.Aug.18	7	income	11580,72
10.Sep.18	8	income	11580,72
10.Oct.18	9	income	11580,72
10.Nov.18	10	income	11580,72
10.Dec.18	11	income	11580,72
10.Jan.19	12	income	11580,72
Total			18968,64

The bank's net income (overpayment for the client) is the difference between all income and expenses. In our case, it turned out to be 18,968.68 - highlighted in bold in the table.

Now let's look at net present value. All loan payments are made at different times (dates are indicated in the table). The date of issue is red. All others - blue - payments with an interval of 1 month.

Money loses its value over time. Today I will buy a large chocolate bar for 100 rubles, but in a year it will cost 120. That is, in a year, 100 rubles will not be enough to buy a chocolate bar. That means 100 rubles. today and in a year different amounts. In our example, 100 rubles. today correspond to 120 rubles in a year.

Discounting is the reduction of future money to today's value. That is, if we bring to today (discount) the cost of a chocolate bar next year (120 rubles), then we get 100 rubles.

All loan payments must be discounted to the loan disbursement date. Net present value is the sum of all discounted payments.

We need to determine the discount rate at which the net present value will be zero. That is, today's 100 rubles. will be equal to 120 rubles in a year. This rate is IRR. It will correspond to the value of the full cost of the loan.

In the loan example, this is the rate at which the overpayment will be zero. That is, a loan of 120,000 rubles. will be equal to the sum of all discounted payments from the client to the bank.

For independent calculations you will need the EXEL program.

Column “B” contains dates. The first date (or rather, zero) is January 10, 2018 – the date of loan approval. On this date we make a calculation (discount) and determine the IRR or the full cost of the loan.

In column “C” we indicate the amounts. The first amount is negative - approved loan. The rest are positive – all payments are on schedule.

EXEL has a built-in function for determining IRR (in our case, UCS), it is called “NET”.

To calculate, in cell “C15” we enter the equal sign and the name of the formula “NET INDOH”. In the figure, the formula is shown in the formula bar - underlined in red.

Then, in parentheses, first enter all the values ​​(blue font in the formula and blue range in the table), then the dates (green font in the formula and green range in the table).

We press “enter” and see in cell “C15” the value 0.3204 (bottom figure). This is the full cost of the loan. Only it is expressed, not as a percentage, but in fractions of a unit. To express it as a percentage, we multiply the value by 100. The result is visible in cell “C16”. It turned out to be 32.04.

So, with a loan for a period of 12 months, in the amount of 120 thousand at a rate of 28% per annum, which corresponds to a monthly payment of 11,580.72 rubles, the PSC will be 32.04.

Important. In this example, loan payments are considered as input data. How and where can the borrower get them?

In the loan agreement in the payment schedule. If there is no contract yet. You need to calculate payments yourself. To do this, you can use any online loan calculator.

We enter all the known loan parameters into the form, click “Calculate” and see the result. The monthly payment amount is circled in red in the figure.

Select a calculator to calculate the UCS. For example, this one: www.ipotek.ru/calc2n/results.php?matr=4

We indicate the loan parameters (take the previous example):

• period 12 months;
• amount 120,000;
• rate 28;
• approval date January 10, 2018

If necessary, we enter information about insurance and other additional payments into the form. For now we will assume without insurance.

We get 32.04%, which corresponds to the value calculated in EXEL.

Does the loan term and early repayment affect the calculation?

To answer the question, compare a loan in the amount of 120,000 at a rate of 28% for a period of 1 and 2 years.

For a loan with a term of one year, the PSC turned out to be 32.04%; with an increase in the term by 2 times, the value will decrease to 31.97%. In the figure these values ​​are shown in white.

As the period increases, the total cost decreases, albeit insignificantly.

Now let's determine the impact of early repayment on the size of the PSK. For a loan with a term of 1 year, we plan to repay the balance of the debt (principal debt) ahead of schedule along with the 10th regular payment.

For a loan for a period of 2 years - together with the 14th.

The figure shows that the change in the UCS is ambiguous. With a loan term of 2 years, early repayment increases the PSC; with a term of one year, it decreases.

A case from one's life

Maxim: “The problem arose was that there was a mortgage. Initially, the contract indicated a PSC of 14.3%. After each early repayment, the schedule was recalculated. They gave a new value for the UCS. As a result, after the second early payment, the total cost increased to 16.4%??? What this is connected with is not clear. I wrote a complaint. They gave an answer, but there was something unintelligible with reference to some formulas, calculations, etc.”

The complexity of calculation and interpretation makes the indicator inconvenient for personal use.

Let's compare the same options based on the amount of overpayment.

For a loan with a term of 2 years, the borrower will overpay the bank 38,079 rubles, which is much more than for a year - 18,969. Early repayment definitely reduces the overpayment, regardless of the loan term. The indicator is clear. Therefore, in case of early repayment, it is better to focus on the final overpayment, and not on the PSC indicator.

Let us again refer to the amendments to the law. In accordance with this, banks will additionally calculate and communicate the PSC to the borrower in monetary terms. It corresponds to an overpayment (if you do not delve into the question of its composition, taking into account commissions and insurance).

Does the method of calculation affect the UCS?

Annuity and differentiated payments.

Payments to repay the loan can be annuity (the same) and differentiated (decreasing due to a decrease in the amount of interest).

Let's do the calculation for the same example.

Index	date	Differentiated payments	Annuity payments
approval date	10.Jan.18	-120 000,00	-120 000,00
payment 1	10.Feb.18	12 853,70	11 580,72
payment 2	10.Mar.18	12 362,74	11 580,72
payment 3	10.Apr.18	12 378,08	11 580,72
payment 4	10.May.18	12 071,23	11 580,72
payment 5	10.Jun.18	11 902,47	11 580,72
payment 6	10.Jul.18	11 610,96	11 580,72
payment 7	10.Aug.18	11 426,85	11 580,72
payment 8	10.Sep.18	11 189,04	11 580,72
payment 9	10.Oct.18	10 920,55	11 580,72
payment 10	10.Nov.18	10 713,42	11 580,72
payment 11	10.Dec.18	10 460,27	11 580,72
payment 12	10.Jan.19	10 237,81	11 580,72
OVERPAYMENT	18 127,12	18 968,64
PSK	0,3189	0,3204
PSK, %	31,89	32,04

Differentiated payments are more profitable for the borrower. In them, the amount of overpayment and the value of the PSC are less.

Exact and approximate calculation method.

With exact, the exact number of days in each month and year is taken into account. That is, there are 30 or 31 in a month, and 28 or 29 in February. There are 365 or 366 in a year.

In an approximate way, each month consists of 30 days.

We will calculate the loan on the same terms with differentiated payments.

Index	date	Accurate payments	Approximate payments
approval date	10.Jan.18	-120 000,00	-120 000,00
payment 1	10.Feb.18	12 853,70	12 800,00
payment 2	10.Mar.18	12 362,74	12 566,67
payment 3	10.Apr.18	12 378,08	12 333,33
payment 4	10.May.18	12 071,23	12 100,00
payment 5	10.Jun.18	11 902,47	11 866,67
payment 6	10.Jul.18	11 610,96	11 633,33
payment 7	10.Aug.18	11 426,85	11 400,00
payment 8	10.Sep.18	11 189,04	11 166,67
payment 9	10.Oct.18	10 920,55	10 933,33
payment 10	10.Nov.18	10 713,42	10 700,00
payment 11	10.Dec.18	10 460,27	10 466,67
payment 12	10.Jan.19	10 237,81	10 233,33
OVERPAYMENT	18 127,12	18 200,00
PSK	0,3189	0,3205
PSK, %	31,89	32,05

The exact method gave a lower value of overpayment and PSC.

Example of total cost calculation

Full cost of a consumer loan

Why is the total cost of the loan different from the interest rate?

The PSC value differs from the loan interest for two reasons:

1 In calculating the PSC, not only interest payments are taken into account. In these cases, the value of the PSC will always be higher than the interest rate.

2 The annual interest rate and PSC are mathematically different indicators. The PSC value corresponds to the internal rate of return (IRR).

IRR characterizes the average annual return on a loan for the bank or the cost to the borrower. The formula is based on discounting and takes into account that the money you pay the bank “today” is worth more than the money paid at the end of the loan term.

Therefore, in most cases, even when only interest payments are taken into account, the TIC is higher than the interest rate.

Conclusion

The total cost is an information indicator for the borrower to choose the optimal loan.

Banks calculate PIC as a percentage. As part of the PSC, they take into account insurance and other payments differently. The calculation is complex and ambiguous. It does not always allow you to correctly compare different options.

Therefore, you must calculate the full cost yourself, including all expected payments in the calculation. This will allow you to realistically evaluate each loan offer.

You can calculate the cost in EXEL or using one of the many loan calculators. It is important to calculate all options in one way (only on one calculator), because different calculators give different results.

If you are new to financial mathematics, it is better to focus on another indicator. Decide how much money you want to borrow and how long you realistically expect to repay it. Calculate the amount of overpayment for different options. Choose the one where you pay less.

about the author

Candidate of Economic Sciences, Associate Professor of the Department of Economics at the Ural Social Economic Institute. I read banking disciplines. I live in Chelyabinsk, mother of two wonderful boys. I love the sea, the sun, reading, I enjoy handicrafts, and ice skating. I also like to learn something new.