Krediidikulu

Krediidikulu is the total cost of obtaining and using credit, typically expressed as the sum of interest and fees charged by a lender over the term of a loan or credit arrangement. The concept helps borrowers assess the affordability of borrowing by showing how much extra, beyond the borrowed principal, must be paid to obtain credit. The price of credit is made up of several components: interest charges, arrangement or service fees, late payment penalties, mandatory insurances, and, in some cases, currency conversion costs or annual maintenance fees. Some costs may be one-time, while others recur during the term of the credit.

In practice, the nominal interest rate and such fees interact with the repayment schedule to determine the total amount repaid. The annual percentage rate (APR) or an equivalent standardized rate is commonly used to express the cost of credit on an annual basis, allowing borrowers to compare different offers on a like-for-like basis. Calculating the exact krediidikulu can be complex when loans are repaid through installments, as interest is charged on outstanding balance and varies with the amortization.

Regulatory context: In Estonia and the European Union, lenders are required to disclose the cost of credit to consumers in a standardized way, typically via APR or a comparable metric, enabling transparent comparison of offers.

See also: annual percentage rate, interest rate, consumer credit, loan fees.