Nominalzinssatz

Nominalzinssatz refers to the stated interest rate on a loan or investment, without considering any additional fees or the effects of compounding. It is the basic percentage that is advertised or agreed upon between the lender and borrower. For example, if a bank offers a mortgage with a nominal interest rate of 5%, it means that 5% of the principal amount will be charged as interest over a specified period, typically annually.

However, the nominal interest rate does not always reflect the true cost of borrowing or the actual return on an investment. This is because it does not account for factors such as compounding frequency or any associated charges like processing fees, administrative costs, or insurance premiums. These additional elements can significantly alter the effective cost or yield.

To understand the true cost or return, one must consider the effective interest rate, also known as the annual percentage rate (APR) or effektiver Jahreszins in German. The effective interest rate takes into account the nominal interest rate along with the compounding frequency and all other charges. Therefore, when comparing different loan offers or investment opportunities, it is crucial to look beyond the nominal interest rate and examine the effective interest rate to make an informed decision. The nominal interest rate is a starting point for calculation, but the effective rate provides a more comprehensive picture.