S.L. 378.12 Art. 21Calculation of the annual percentage rate of charge.

(1) The annual percentage rate of charge means the total cost of the credit to the consumer, expressed as an annual percentage of the total amount of credit.

(2) The annual percentage rate of charge, equating, on an annual basis, to the present value of all commitments (drawdowns, repayments and charges), future or existing, agreed by the creditor and consumer, shall be calculated in accordance with the mathematical formula set out in Part I of the Third Schedule.

(3) The following costs shall be included in the total cost of credit to the consumer:

(a) the costs of maintaining an account recording both payment transactions and drawdowns;

(b) the costs of using a means of payment for both payment transactions and drawdowns; and

(c) other costs relating to payment transactions.

(4) The costs mentioned in sub-regulation (3) shall not be included in the total cost of credit to the consumer where the opening of the account is optional and the costs of the account have been clearly and separately shown in the consumer credit agreement or in any other agreement concluded with the consumer.

(5) For the purpose of calculating the annual percentage rate of charge, the total cost of the credit to the consumer shall be determined, with the exception of any charges payable by the consumer for non-compliance with any of his commitments laid down in the credit agreement and charges other than the purchase price which, for purchases of goods or services, he is obliged to pay whether the transaction is effected in cash or on credit.

(6) The calculation of the annual percentage rate of charge shall be based on the assumption that:

(a) 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; and

(b) the borrowing rate and other charges will remain fixed in relation to the initial level and will remain applicable until the end of the credit agreement in the circumstance that the credit agreement contains a clause allowing variations in the borrowing rate and, where applicable, charges contained in the annual percentage rate of charge but unquantifiable at the time of calculation.

(7) Where necessary the additional assumptions set out in the Third Schedule may be used in calculating the annual percentage rate of charge.