The most common mistake when comparing a loan is that people look only at the nominal interest rate. In practice, two loans with the same rate (for example 3,50 %) can differ by several thousand euros in total cost because offers vary in fees (approval, account maintenance, insurance) and in how those costs are spread over time.
In short:
- The interest rate alone is not enough. For comparison, use the APR and the total cost.
- The difference comes from approval fees, maintenance fees, and insurance.
- If you want a quick estimate, use the APR calculator and the loan calculator.
The problem: the interest rate is only part of the cost
When a bank advertises a “favourable interest rate”, it often does not really give you a sense of how much will be added to the total cost through:
- approval fees (for example 0-2 % of the amount),
- loan maintenance fees (for example 0-7 € per month),
- insurance (life insurance or loan insurance),
- “existing customer” conditions or service packages.
The solution: APR + total cost (not just the interest rate)
The most useful indicator for comparison is the Annual Percentage Rate (APR), because it tries to capture both interest and the fees of the loan service. It is not perfect (it depends on assumptions), but in practice it is much better than the nominal interest rate.
If you want to see how large the differences between banks can be even under standardised assumptions, take a look at our article What is APR and why is it more important than the nominal interest rate?, which includes the APR table by the Bank of Slovenia.
A concrete example: the same interest rate, different costs
Let’s look at a very typical scenario:
- Amount: 150.000 €
- Term: 20 years
- Nominal interest rate: 3,50 % (the same in both cases)
| Item | Offer A | Offer B |
|---|---|---|
| Interest rate | 3,50 % | 3,50 % |
| Approval fee | 0 € | 1.500 € |
| Loan maintenance | 0 €/month | 6 €/month |
| Insurance (example) | 0 € | 15 €/month |
What is the point?
Even though the interest rate is the same, “Offer B” is noticeably more expensive because the costs accumulate in the background. In cases like this, the APR is almost always higher, and the total cost can quickly climb to several thousand euros, depending on the loan term and any additional conditions.
To calculate your own case, use: APR calculator (costs -> APR) and loan calculator (instalment -> total interest).
What to ask the bank (checklist)
- What is the approval fee (in € and as a %)?
- Is there a maintenance fee (and how much per month)?
- What are the conditions for the advertised interest rate (package, existing-customer status, insurance)?
- Is insurance required (and is it tied to a selected provider)?
- What is the APR in the written offer under the same assumptions?