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AER (Annual Equivalent Rate)
The interest rate that indicates the effective yield or actual cost of a financial product. The AER is calculated using a standardised mathematical formula that takes into account the nominal interest rate of the transaction, the frequency of the payments (monthly, quarterly, etc.), bank fees and other operating expenses. In relation to loans, the calculation of actual cost does not include certain items, such as the expenses that the client may avoid by using the powers granted to him in the contract, expenses that must be paid to third parties or expenses relating to insurance and guarantees (where the institution obliges the client to take these out in order to grant the loan).
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