Annexes to COM(1996)79-2 - Amendment of Directives 87/102 (as amended by Directive 90/88) for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit

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dossier COM(1996)79-2 - Amendment of Directives 87/102 (as amended by Directive 90/88) for the approximation of the laws, regulations and ...
document COM(1996)79 EN
date February 16, 1998
ANNEX I

'ANNEX II

THE BASIC EQUATION EXPRESSING THE EQUIVALENCE OF LOANS ON THE ONE HAND AND REPAYMENTS AND CHARGES ON THE OTHER

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Meaning of letters and symbols:

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Remarks:

(a) The amounts paid by both parties at different times shall not necessarily be equal and shall not necessarily be paid at equal intervals.

(b) The starting date shall be that of the first loan.

(c) Intervals between dates used in the calculations shall be expressed in years or in fractions of a year. A year is presumed to have 365 days or 365,25 days or (for leap years) 366 days, 52 weeks or 12 equal months. An equal month is presumed to have 30,41666 days (i.e. >NUM>365/>DEN>12).

(d) The result of the calculation shall be expressed with an accuracy of at least one decimal place. When rounding to a particular decimal place the following rule shall apply:

If the figure at the decimal place following this particular decimal place is greater than or equal to 5, the figure at this particular decimal place shall be increased by one.

(e) Member States shall provide that the methods of resolution applicable give a result equal to that of the examples presented in Annex III.`


ANNEX II

'ANNEX III

EXAMPLES OF CALCULATION

A. CALCULATION OF THE ANNUAL PERCENTAGE RATE OF CHARGE ON A CALENDAR BASIS (1 YEAR = 365 DAYS (OR 366 DAYS FOR LEAP YEARS))

First example

Sum loaned: S = ECU 1 000 on 1 January 1994.

It is repaid in a single payment of ECU 1 200 made on 1 July 1995 i.e. 1 ½ years or 546 (= 365 + 181) days after the date of the loan.

The equation becomes:

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or:

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This amount will be rounded to 13 % (or 12,96 % if an accuracy of two decimal places is preferred).

Second example

The sum loaned is S = ECU 1 000, but the creditor retains ECU 50 for administrative expenses, so that the loan is in fact ECU 950; the repayment of ECU 1 200, as in the first example, is again made on 1 July 1995.

The equation becomes:

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or:

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This amount will be rounded to 16,9 %.

Third example

The sum loaned is ECU 1 000, on 1 January 1994, repayable in two amounts, each of ECU 600, paid after one and two years respectively.

The equation becomes:

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It is solved by algebra and produces i = 0,1306623 rounded to 13,1 % (or 13,07 % if an accuracy of two decimal places is preferred).

Fourth example

The sum loaned is S = ECU 1 000, on 1 January 1994, and the amounts to be paid by the borrower are:

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The equation becomes:

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This equation allows i to be calculated by successive approximations, which can be programmed on a pocket calculator.

The result is i = 0,13226 rounded to 13,2 % (or 13,23 % if an accuracy of two decimal places is preferred).

B. CALCULATION OF THE ANNUAL PERCENTAGE RATE OF CHARGE ON THE BASIS OF A STANDARD YEAR (1 YEAR = 365 DAYS OR 365,25 DAYS, 52 WEEKS, OR 12 EQUAL MONTHS)

First example

Sum loaned: S = ECU 1 000.

It is repaid in a single payment of ECU 1 200 made in 1,5 years (i.e. 1,5 × 365 = 547,5 days, 1,5 × 365,25 = 547,875 days, 1,5 × 366 = 549 days, 1,5 × 12 = 18 months, or 1,5 × 52 = 78 weeks) after the date of the loan.

The equation becomes:

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or:

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This amount will be rounded to 12,9 % (or 12,92 % if an accuracy of two decimal places is preferred).

Second example

The sum loaned is S = ECU 1 000, but the creditor retains ECU 50 for administrative expenses, so that the loan is in fact ECU 950; the repayment of ECU 1 200, as in the first example, is again made 1,5 years after the date of the loan.

The equation becomes:

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or:

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This amount will be rounded to 16,9 % (or 16,85 % if an accuracy of two decimal places is preferred).

Third example

The sum loaned is ECU 1 000, repayable in two amounts, each of ECU 600, paid after one and two years respectively.

The equation becomes:

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It is solved by algebra and produces i = 0,13066 which will be rounded to 13,1 % (or 13,07 % if an accuracy of two decimal places is preferred).

Fourth example

The sum loaned is S = ECU 1 000 and the amounts to be paid by the borrower are:

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The equation becomes:


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This equation allows i to be calculated by successive approximations, which can be programmed on a pocket calculator.

The result is i = 0,13185 which will be rounded to 13,2 % (or 13,19 % if an accuracy of two decimal places is preferred).`