Understanding of the Indicator RRSO and Its Role in Students’ Loan Decisions – Survey Results
Magdalena Redo
The Nicolaus Copernicus University in Toruń , Polandhttps://orcid.org/0000-0002-1274-3181
Piotr Prewysz-Kwinto
WSB Merito University in Toruń , Polandhttps://orcid.org/0000-0002-4151-7335
Abstract
The results of the survey conducted in the spring of 2021 among 625 students of Toruń's universities show that the RRSO (Rzeczywista Roczna Stopa Oprocentowania) is a measure known and used to assess the cost of a loan by borrowers (72% of all surveyed students recognize the indicator, and 86% students who used credit products were guided by its level when making a credit decision). It should be emphasized, however, that the RRSO value is not properly understood, which may be due to the complicated calculation formula and the misleading name of the indicator (only 15% of respondents correctly understand that the RRSO includes not only interest, but also non-interest loan costs, and that the RRSO is provided on an annual basis, which means that the true cost for a shorter loan is correspondingly lower). What's more, people taking out a loan expect a reliable explanation of the RRSO value, but most employees of credit institutions do not seem to do it, which may mean that they may also have problems with the correct interpretation of the RRSO (among students who declared contact with an employee of a financial institution when taking out the loan, only 25% were informed in an accessible and fully understandable manner about the informative value of the level of the indicator included in the agreement, and as many as 33% indicated that the employee did not discuss the RRSO level at all). The above seems to be an indisputable argument for increasing the financial awareness of Poles and the necessity of education in this area from an early age. Without this, in a situation of increasingly easier availability of loans and ever lower interest rates, more and more Poles will make wrong financial decisions that weigh on their lives.
Keywords:
Loan, interest rate, non-interest loan costs, loan cost, indicator RRSO (APR/ APRC – Annual Percentage Rate of Charge)References
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The Nicolaus Copernicus University in Toruń https://orcid.org/0000-0002-1274-3181
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.
