Vuosikorot

Vuosikorot, meaning "annual interest" in Finnish, refers to the interest rate applied to a loan or investment over a one-year period. This is a standard way to express interest rates, making it easier to compare different financial products. When a loan or savings account states an annual interest rate, it signifies the percentage of the principal amount that will be earned or paid in interest over a full year, assuming no additional deposits or withdrawals and that the interest is compounded annually.

For example, if you have a savings account with a 2% vuosikorko, it means that after one year, you would earn 2% of your initial deposit as interest. Similarly, if you take out a loan with a 5% vuosikorko, you will owe 5% of the outstanding loan amount in interest over the course of a year. This annual rate is often broken down into more frequent periods, such as monthly or daily, for calculation purposes, especially in the case of loans with regular repayment schedules. Understanding the vuosikorko is crucial for individuals and businesses to make informed decisions about borrowing, saving, and investing.