An ad: „cash loan from 7.8% interest”. The client reads: cheap. Files, signs, sees the first payment a month later. Counts backwards and it turns out the proportional rate is 14.2% annually. What happened? The marketer showed nominal interest, the client bought it, but the real cost sits in RRSO. Here I lay out that gap step by step.
Nominal interest — one line
Nominal interest is the annual percentage charged on the outstanding capital. Typically 7-12% on bank loans, 14.5% (statutory cap) on chwilówki. The number banks like to show in ads because it sounds friendly. It doesn't include commission, insurance or administrative fees.
Arrangement commission — often hidden
Commission is a one-off fee taken upfront or added to the loan amount. 1-5% at banks, up to 25% at non-bank lenders (statutory cap). A bank advertising „7.8% loan” may charge 5% commission. On 30 000 PLN that's 1 500 PLN upfront, invisible in the rate, added to the payment.
Mandatory insurance
Some banks tie a lower interest rate to buying life insurance. „With insurance — 7.8%. Without insurance — 11.5%”. Insurance costs 1-3% of the amount per year. RRSO includes mandatory insurance, nominal interest doesn't. „Cheaper rate with insurance” often runs more expensive than „more expensive without”.
RRSO — the statutory formula
RRSO (Real Annual Percentage Rate) is computed using the formula in appendix 4 of the Polish consumer credit law. It takes nominal interest, commission, mandatory fees, mandatory insurance. Brings everything down to a single annual figure you can compare across offers. Every regulated institution uses the same formula, so the comparison is fair.
A concrete example: 30 000 PLN over 48 months
Offer A: 7.8% interest, 4% commission, mandatory insurance 1.5% per year. RRSO comes out at 14.2%. Total cost: 9 100 PLN. Offer B: 10.5% interest, 0% commission, no mandatory insurance. RRSO comes out at 11.0%. Total cost: 7 100 PLN. Offer B with the „pricier” rate saves you 2 000 PLN across the loan. It happens all the time.
What to read before signing
Skip nominal interest in the first contact with an offer. Check two numbers: RRSO and total amount due. Two numbers the bank must show on the first page of the contract under the law. Everything else — „attractive rate”, „first year interest-free”, „free insurance package” — is wrapping. RRSO and total cost are the substance.