How does the APR differ from the interest rate?

The nominal interest rate describes only the interest charged on the capital. The APR (in Poland: RRSO) covers the interest and all other costs of the loan - the arrangement fee, insurance, account fees - and also takes into account when you pay them. That is why the APR is always higher than or equal to the interest rate and is the only number you should compare between offers.

Is a 0% loan always free?

No. A PLN 10,000 loan at zero interest, with a PLN 1,000 fee deducted from the payout and repaid in 12 instalments, has an APR of 21.83%. You receive PLN 9,000 and pay back PLN 10,000. That is more expensive than an honest loan at 10% interest with no fee, whose APR is 10.47%.

Can an offer with a lower interest rate have a higher APR?

Yes, and it happens often. An offer at 5.90% interest with a 10% fee has an APR of 10.40%, while an offer at 7.90% with no fee has an APR of 8.19%. With the same PLN 30,000 in hand and the same 60-month term, the one with the higher interest rate is cheaper - by PLN 1,775.52.

Can you compare the APR of two loans with different repayment terms?

You should not compare them directly. The APR is an annual rate, so the same cost spread over a longer period gives a lower APR. The same PLN 1,000 fee on a PLN 10,000 loan gives an APR of 21.83% over 12 instalments and only 10.83% over 24 instalments - even though in the second case you pay exactly the same number of zloty. Compare APRs only between offers for the same amount and the same term.

Loans

APR or interest rate? Which number really tells you what you will pay

In its adverts the bank shows you whichever number looks better. Usually that is the interest rate - because it leaves out the fee, the insurance and the charges. The APR cannot be trimmed like that. We show why it is the only number worth your attention.

7 min read · 14 July 2026 · Piotr Litwa, KredytPartner

The interest rate does not lie - it just does not tell the whole truth

The nominal interest rate describes one thing: how much interest the bank will charge on the capital you borrow. It is a true number. The problem is that interest is often the smaller part of what you actually pay.

The rest hides under other names - an arrangement fee, "life" insurance added to the loan amount, an account fee, a processing fee. None of them is interest, so none of them affects the interest rate. But all of them come out of your pocket.

In one sentence

The interest rate is the price of borrowing the money itself. The APR is the price of the whole transaction - including whatever the bank chose to call something other than "interest".

What exactly the APR includes

In Poland the APR is called RRSO - Rzeczywista Roczna Stopa Oprocentowania, literally the "actual annual percentage rate" - and it is defined in the Consumer Credit Act. The bank is required to state it and cannot leave anything out of it. It includes:

interest resulting from the nominal interest rate,
the arrangement fee for granting the loan,
insurance, if it is a condition of getting the loan,
processing and administration fees,
account fees, if an account is required.

But the APR does one more thing that few people remember: it takes into account when you pay. A thousand zloty fee paid today hurts more than a thousand zloty spread over instalments for three years - because today that money could be working somewhere else. The APR prices this in mathematically.

Σ C_k·(1+X)^-t_k = Σ D_l·(1+X)^-s_l

X - the APR, i.e. the rate we are looking for
C_k - amounts you receive from the bank (the loan payout)
D_l - amounts you pay back (instalments, fees, charges)
t, s - time in years from when the loan is paid out

In plain English: the APR is the rate at which what you receive has exactly the same value today as what you will pay back. The equation cannot be solved with a formula - it has to be solved numerically. That is why the APR is worked out in a calculator, not in your head.

The "0%" loan trap

"Zero per cent. Zero interest. You pay back exactly what you borrowed." Sounds like a gift. Let's check.

You take a loan of PLN 10,000. Interest: 0%. Fee: PLN 1,000, deducted from the payout. Term: 12 months.

Item	Amount
Loan amount in the agreement	PLN 10,000.00
Fee deducted from the payout	-PLN 1,000.00
What actually reaches your account	PLN 9,000.00
Interest (0%)	PLN 0.00
Monthly instalment (12 instalments)	PLN 833.33
Total you pay back	PLN 10,000.00
APR	21.83%

"Zero per cent" costs 21.83% a year

You received PLN 9,000 and pay back PLN 10,000 within a year. That is PLN 1,000 of cost on PLN 9,000 actually borrowed - and repaid in instalments, so on average you have the use of that money for half a year, not the whole year. Hence an APR well above 11%. Exactly: 21.83%.

And now a comparison that should set off an alarm bell for good. The same PLN 10,000 loan over 12 months, but honestly charging 10% interest, with no fee at all:

Offer	Interest rate	Fee	Total cost	APR
"0% loan"	0.00%	PLN 1,000.00	PLN 1,000.00	21.83%
Ordinary loan	10.00%	PLN 0.00	PLN 549.91	10.47%

The loan that shouts "0%" in its advert is in reality twice as expensive as the loan that honestly admits to ten per cent. The difference in your pocket: PLN 450.09.

Why the repayment term changes the APR, even though it does not change the cost

The same "0% + PLN 1,000 fee" offer, only spread over 24 months instead of twelve, has an APR of 10.83% instead of 21.83%. In zloty you pay exactly the same - PLN 1,000. The only thing that changed is that the cost is spread over twice as long, and the APR is an annual rate.

The only situation in which the APR misleads

Do not compare the APR of loans with different repayment terms. A bank can deliberately lengthen the term to make the APR look nicer - and you will pay more interest, because you use the capital for longer. Compare APRs only for the same amount and the same term. For everything else there is one number: the total cost of the loan in zloty.

A table that breaks your intuition: lower interest rate, higher APR

Two realistic cash loan offers. In both you need and receive PLN 30,000 in hand, in both you repay over 60 months. Offer B has a lower interest rate and - note this - lower interest. And yet it is more expensive.

Parameter	Offer A	Offer B
Nominal interest rate	7.90%	5.90%
Fee	PLN 0	PLN 3,000 (10%)
Loan amount in the agreement	PLN 30,000	PLN 33,000
You receive in hand	PLN 30,000	PLN 30,000
Instalment (60 months)	PLN 606.86	PLN 636.45
Total interest	PLN 6,411.43	PLN 5,186.95
Fee	PLN 0.00	PLN 3,000.00
Total cost	PLN 6,411.43	PLN 8,186.95
APR	8.19%	10.40%

Look at that pair of rows. Offer B has an interest rate 2 percentage points lower and will charge you PLN 1,224.48 less interest. If you compared only those two numbers, you would choose B and lose PLN 1,775.52.

The APR sees what the tables in adverts do not: the PLN 3,000 fee is added to the loan amount, so you pay interest on it too, and on top of that you pay it back in full.

The extreme case: a payday loan

A loan of PLN 1,000 for 30 days, with a PLN 100 fee. "Only ten per cent!" says the advert. The APR of such a loan is about 219%, because ten per cent a month means ten per cent twelve times a year, on an amount that grows exponentially along with the interest. It is the same compound interest, just set against you.

How to compare offers in three steps

Work out how much money you really need in your account. Not the "loan amount" in the agreement, but the amount in hand. If the fee is deducted from the payout, you have to borrow more than you need.
Make the repayment terms equal. Without that, the APRs of two offers are not comparable. The same number of instalments in both - only then compare.
Compare two numbers: the APR and the total cost in zloty. The APR tells you how expensive the loan is relative to the amount and time. The total cost tells you how much you will actually take out of your wallet. You need both - the first for ranking, the second to decide whether you can afford it at all.

A rule worth remembering

If the salesperson talks about the interest rate rather than the APR - ask about the APR. If they change the subject when you ask about the APR, you already know the answer.

What the APR does not include

Honesty requires pointing out the limits. The APR does not include costs that are not a condition of the loan or are not known on the day you sign:

Penalty interest for late repayment.
Early repayment charges (capped by law for consumer loans; for mortgages they can be high during the first 3 years).
Changes in the interest rate on variable-rate loans. The APR is calculated on the assumption that the rate will not change until the end - and that assumption almost never holds.
Optional insurance that the adviser presents as "compulsory". If it really is a condition of the loan, it must be included in the APR. If it is not, simply do not buy it.

That is why the APR has limited predictive value for a mortgage - and why it is worth knowing how a bank tests your capacity at higher rates before you sign an agreement for 25 years.

Work it out yourself

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APR calculator

Enter the interest rate, fee, insurance and monthly charge. You will see the APR and the total cost in zloty - the same two numbers this article is about. You can also recreate both offers from the table above and check our results.

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Read on

How a bank really calculates your borrowing capacity - DSTI, the 2.5 percentage point buffer and the credit card that takes PLN 66,000 off your capacity even though you never use it.
Overpay your loan or invest? - why overpaying a loan at 7.5% beats a deposit that would have to pay 9.58% gross.
Compound interest from scratch - the same mechanism that pushed the payday loan's APR up to 219% can work for you.

All the numbers in this article were calculated with the engine that powers our calculators (js/finance.js), assuming fixed instalments and a fixed interest rate. This text is educational and does not constitute investment advice or an offer within the meaning of Art. 66 §1 of the Polish Civil Code.