APRC (RPSN in Czech): the annual percentage rate of charge

What does APRC actually mean?

APRC (short for the Annual Percentage Rate of Charge) is a standardised measure of the cost of credit that includes every compulsory payment tied to taking out and repaying it. The point is to let you compare bank offers using one figure, rather than the borrowing rate alone, which hides fees.

APRC is always higher than the borrowing rate, because on top of interest it also includes the arrangement fee, the property valuation, account maintenance or compulsory insurance. How much higher depends on what a particular bank charges and what you have to take out alongside the loan; there is no single range that applies across the market. So compare the APRC of specific offers, not the gap against some supposedly typical figure.

Why does APRC matter?

APRC is the one figure that lets you make a real comparison between banks. A bank with a lower interest rate can have a higher APRC, because it charges an arrangement fee, requires compulsory insurance, or charges for account maintenance. The interest rate does not show any of this; APRC does. The comparison of two banks below shows it with real figures.

• Borrowing rate ≠ total cost. The interest rate tells you what the bank charges for lending the money. APRC tells you what the loan actually costs you.
• Required by law. Banks must state APRC in any advertisement or offer that includes figures. An advertisement without APRC is unlawful.
• Helps uncover hidden costs. The bigger the gap between the interest rate and APRC, the more the bank is charging on top of interest. Ask which items these are and which of them are compulsory.

How do APRC and the borrowing rate differ?

What it includes	Borrowing rate	APRC
Interest on the amount borrowed	Yes	Yes
Arrangement fee	No	Yes
Property valuation	No	Yes
Account maintenance fee	No	Yes
Compulsory insurance (if any)	No	Yes
Payment protection insurance (optional)	No	No

What gap between the interest rate and APRC is normal?

APRC is always somewhat higher than the borrowing rate, because it adds fees on top of interest. A small gap means an offer without hidden costs.

When the gap is large, the bank is charging something extra. That is not necessarily a trap, but you want to know what it is: an arrangement fee, a property valuation, account maintenance or compulsory insurance.

The most common reason for a large gap is payment protection insurance

Banks often offer two versions of the same mortgage: without payment protection insurance and with it. With insurance you get a lower interest rate. It looks like the better offer.

But the premium is paid every month on top, and that is included in APRC. That is what it looks like in the published representative examples of two banks that publish both versions:

• Air Bank on a new mortgage: with insurance, the interest rate is a tenth of a percentage point lower, but APRC is seven tenths higher.
• Moneta: with insurance, the interest rate is even two tenths of a percentage point lower, but APRC is eight tenths higher.

Both banks state this themselves and hide nothing. But anyone comparing offers by interest rate alone would pick the more expensive version at both banks, believing they are getting the cheaper one. That is exactly the situation APRC exists for.

Payment protection insurance can make sense. It just isn't a discount: it's buying an extra service, and APRC says so plainly.

So it only makes sense to compare APRC against APRC, and only between offers with the same loan amount and the same repayment term. Two offers with the same interest rate can have a completely different total cost.

A mortgage advertisement that states a rate or a repayment amount must also state the APRC and a representative example. If an advertisement shows only an attractive percentage and nothing else, there is nothing to compare the offer against. This is overseen by the Czech National Bank (CNB).

How do you check APRC on a specific offer?

The bank must give you the APRC in the ESIS document (European Standardised Information Sheet) before you sign the contract. ESIS contains the full breakdown: the borrowing rate, APRC, the total amount to be repaid and the repayment structure for the whole fixed-rate period.

In the HypoGO calculator you see an indicative APRC immediately after entering your figures, as an output. The bank then sets the actual figure after assessing your application.

When should you be careful?

• APRC is calculated for the whole term of the loan, but the agreed fixed-rate period is much shorter. Once it ends, both the rate and APRC are recalculated.
• Payment protection insurance is not included in APRC if it is optional. If the bank requires it as a condition, it must be included in APRC.
• Refinancing has its own APRC. It is calculated from the point you move to the new bank, not from the original drawdown.