The Centrale Bank van Curaçao en Sint Maarten (CBCS) recently introduced an APR Calculator on its website. This APR-tool calculates the true cost of loans, helping consumers become aware of all the costs involved when taking out a loan. This tool allows users to calculate the APR of a loan offer by entering information such as the loan amount, the repayment amount, frequency, and up-front charges if applicable. It helps consumers compare loan offers and easily identify the most economical option.
What is APR?
The Annual Percentage Rate (APR) is the total cost of borrowing money, expressed as an annual percentage of the total loan amount. It includes interest and any other directly related fees, such as tax and administration costs, whether paid upfront or added to the loan. The higher the APR, the higher the total cost of the loan.
APR Provisions and the maximum percentage rate
Since May 2015, credit providers licensed with the CBCS must comply with the APR Provisions to protect consumers. These rules require lenders to provide clear information, including the APR. The maximum APR is capped at 27%. The CBCS encourages the public to signal any offers with an APR exceeding 27% via its signal form.
For example, when borrowing 1.000 guilders for one month with a total repayment of 1.100 guilders, the repayment cost might seem reasonable. But when calculated as an APR, it exceeds 200% – far above the allowed maximum. This highlights how small, short term loans can carry disproportionately high costs. By using the calculator, consumers can better understand what they will be paying in total and make more informed decisions when comparing offers.
The CBCS strongly advises consumers to only seek financial assistance from supervised credit institutions and to remain cautious of loan sharks. To verify whether a lender is supervised by the CBCS, consumers are advised to consult the list of supervised institutions on its website.
