S.L. 378.10 Art. 21Annual percentage rate of charge.

(1) The annual percentage rate of charge shall be calculated in accordance with the mathematical formula set out in the Second Schedule.

(2) The costs of opening and maintaining a specific account, of using a means of payment for both transactions and drawdowns on that account and of other costs relating to payment transactions shall be included in the total cost of credit to the consumer whenever the opening or maintaining of an account is obligatory in order to obtain the credit or to obtain it on the terms and conditions marketed.

(3) The calculation of the annual percentage rate of charge shall be based on the assumption that the credit agreement is to remain valid for the period agreed and that the creditor and the consumer will fulfil their obligations under the terms and by the dates specified in the credit agreement.

(4) In the case of credit agreements containing clauses allowing variations in the borrowing rate and, where applicable, in the charges contained in the annual percentage rate of charge but unquantifiable at the time of calculation, the annual percentage rate of charge shall be calculated on the assumption that the borrowing rate and other charges will remain fixed in relation to the level set at the conclusion of the contract.

(5) For credit agreements for which a fixed borrowing rate is agreed in relation to the initial period of at least five years, at the end of which a negotiation on the borrowing rate takes place to agree on a new fixed rate for a further material period, the calculation of the additional, illustrative annual percentage rate of charge disclosed in the ESIS shall cover only the initial fixed rate period and shall be based on the assumption that, at the end of the fixed borrowing rate period, the capital outstanding is repaid.

(6) Where the credit agreement allows for variations in the borrowing rate, creditors shall inform consumers of the possible impacts of variations on the amounts payable and on the annual percentage rate of charge at least by means of the ESIS, by providing the consumer with an additional annual percentage rate of charge which illustrates the possible risks linked to a significant increase in the borrowing rate:

Provided that where the borrowing rate is not capped, the information referred to in this sub-regulation shall be accompanied by a warning highlighting that the total cost of the credit to the consumer, shown by the annual percentage rate of charge, may change:

Provided further that this sub-regulation shall not apply to credit agreements where the borrowing rate is fixed for an initial period of at least five years, at the end of which a negotiation on the borrowing rate takes place in order to agree on a new fixed rate for a further material period, for which an additional, illustrative annual percentage rate of charge is provided for in the ESIS.

(7) Where applicable, the additional assumptions set out in the Second Schedule shall be used in calculating the annual percentage rate of charge.