The Real Cost of a Loan (APR)

A loan says 6%. The real cost says 10%.

The APR puts interest and fees into one yearly percentage.

€1,000 for a year, for example: 6% interest is €60, plus a €40 fee. You repay €1,100. APR: 10%.

EU lenders must show it before you sign. It is called TAEG in Italian and French, and effektiver Jahreszins in German.

New EU rules, Directive (EU) 2023/2225, apply from 20 November 2026.

Do you compare loans by rate or by APR?

Education, not investment advice.

Read the sheet as text

The Real Cost of a Loan (APR).
Two offers for the same €1,000, paid back after one year. Which costs more?

Offer A: interest 5%, fees €50. Total cost €100. APR about 10%.
Offer B: interest 8%, fees €0. Total cost €80. APR 8%.
The lower interest rate is the more expensive loan.

What APR does: interest and fees, as one yearly %. EU lenders must show it in every offer (TAEG in Italian and French).
Simple example: one year, paid back at the end.

Sources (4)

Directive 2008/48/EC on credit agreements for consumersEuropean Parliament and Council, 2008: the annual percentage rate of charge is the total cost of credit as a yearly percentage of the credit amount, and must be stated in the pre-contract information and in the credit agreement. Checked 2026-10-29.
Directive (EU) 2023/2225 on credit agreements for consumersEuropean Parliament and Council, 2023: replaces Directive 2008/48/EC; member states had to adopt rules by 20 November 2025 and apply them from 20 November 2026. Dates confirmed through law-firm summaries (the EUR-Lex text did not load in our tools): EU Second Consumer Credit Directive: scope and impact for BNPL providers, HLC, undated (apply 20 November 2026; old directive repealed on that date). Checked 2026-10-29.
Der "TAEG" bei Krediten: Was ist das?Verbraucherzentrale Südtirol, December 2022: TAEG (Tasso Annuo Effettivo Globale) is "der effektive Jahreszins"; it includes processing fees, insurance the lender requires, taxes and other contract costs; default interest is not included. Checked 2026-10-29.
Crédit : à quoi correspond le taux annuel effectif global (TAEG) ?French Ministry of the Economy, undated: the French name TAEG, taux annuel effectif global. Checked 2026-10-29.