Module 8 · Borrowing and debt
The true price of a loan
Why the advertised rate is not the whole price, how the APRC (EOM in Slovenia) adds the fees back in, and what fixed and variable rates mean for your payment.
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In this lesson
- Tell the nominal rate from the APRC (EOM) and say which fees the APRC includes
- Compare two loan offers using the APRC and the total amount payable
- Explain how a variable rate is built from a reference rate such as Euribor plus a margin
- Stress-test a variable-rate payment and describe what happened to borrowers in 2022–2023
Nika needs €10,000 for 5 years. Bank X advertises 6.9%, with a €300 processing fee. Bank Y offers 7.9% and no fees. The lower rate looks like the obvious winner. Is it?
The advertised rate is not the whole price
The rate written in a loan contract is the nominal rate (in Slovenian, obrestna mera). It tells you how interest is charged, but it ignores fees.
To fix this, lenders in the EU must also show the APRC, the . In Slovenia it is called EOM, efektivna obrestna mera. Elsewhere you will often see the shorter . The APRC folds interest and compulsory costs into one yearly percentage, using a formula set in EU law. Because every lender uses the same formula, you can compare offers.
The APRC includes costs you must pay to get the loan: processing fees, the fee for an account you are required to open, and insurance the lender requires. It leaves out charges for breaking the contract, such as late fees, and extras you choose freely.
Lenders must also tell you the total amount payable: everything you will pay, in euros, over the whole loan. Together with the APRC, it is the number to compare.
Small, short loans show the biggest gaps. In the first half of 2026, Banka Slovenije reported an average EOM of 56.2% for consumer loans of up to 6 months and €1,000, against 8.7% for loans of up to 10 years and €20,000.
Fixed or variable?
With a , the rate and the payment stay the same for an agreed period, for example 5, 10 or 20 years. You know exactly what you will pay. The price of that certainty is often a slightly higher starting rate.
A is built from two parts:
variable rate = reference rate + margin
The margin, for example 1.5 percentage points, is fixed in your contract. The is a published market rate that moves. In the euro area, including Slovenia, it is usually , the rate at which banks lend euros to each other, quoted for 3, 6 or 12 months. Your rate is recalculated on set dates, and your payment moves with it.
What happened in 2022–2023
For years Euribor was below zero. In January 2022, 12-month Euribor averaged about −0.5%. To fight high inflation, the ECB raised its deposit rate from −0.50% to 4.00% by September 2023. By October 2023, 12-month Euribor averaged about 4.2%. Rates later fell, then rose again in 2026: the deposit rate went from 2.00% to 2.50% between June 2025 and September 2026.
A useful habit before signing a variable-rate loan: work out the payment at today’s rate plus 2 and plus 3 percentage points. If that payment would break your budget, the loan may be too large, or a fixed rate may suit you better.
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