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Annex 1 Calculation of the Annual Percentage Rate

No: 351000116619 Date(g): 7/7/2014 | Date(h): 10/9/1435 Status: In-Force
This annex has been updated by circular No (45025707) dated 17/04/1445H (corresponding to 01/11/2023). Please refer to Rules Governing Calculation of Annual Percentage Rate (APR) to read the updated version.

The Annual Percentage Rate (APR) is the discount rate at which the present value of all payments and installments that are due from the Borrower, representing the Total Amount Payable by the Borrower, equals the present value of all payments of the Amount of Financing available to the Borrower on the date on which the Financing amount or the first payment thereof is available to the Borrower, in accordance with the following equation:

 

where:

m  is the number of the last payment to be received by the Borrower

d is the number of a payment to be received by the Borrower

Cd is the amount of payment (d) to be received by the Borrower

Sd is the period between the date of the first payment to be received by the Borrower and the date of each subsequent payment to the Borrower, expressed in years and fractions of year, therefore S1=0.

n  is the number of the last repayment or payment of charges due on the Borrower

p is the number of a repayment or a payment of charges due on the Borrower

Bp is the amount of repayment or payment of charges (p) due on the Borrower

tp is the period between the date of the first payment to be received by the Borrower and the date of each repayment or payment of charges due on the Borrower, expressed in years and fractions of year

 

X is the Annual Percentage Rate (APR)

  1. For the purpose of calculating APR, periods between dates shall be based on a year of 12 equal months.
  2. For the purpose of calculating APR, the Total Amount Payable by the Borrower shall be determined, including all unavoidable costs and fees with the exception of charges and fees payable by the Borrower as a result of non-compliance with any of his commitments laid down in the Financing Contract.
  3. The calculation of the APR must be based on the assumption that the Financing Contract will remain valid for the agreed period and that the Creditor and the Borrower will fulfil their obligations under the terms specified in the Financing Contract.
  4. If the Financing Contract contains clauses allowing variations in the charges contained in the APR but unquantifiable at the time of calculation, the APR shall be calculated on the assumption that the charges will remain fixed at the initial level and will remain applicable until the end of the Financing Contract.
  5. The Annual Percentage Rate must be calculated and expressed in percentage points with minimum two basis points and the portion of a basis point being rounded to one full point.