What to remember
- Exchange and interest rates affect payments in different ways.
- Check when the fixed-rate period ends.
- A rate floor is not a maximum rate.
Start with the currency you earn
When income and borrowing share a currency, those earnings need no conversion to service the loan. When they differ, the amount taken from income can change even if the loan-currency payment stays the same. Compare conversion costs and adverse exchange scenarios, not only the headline interest rate. ALL denotes lek and EUR denotes euro.
Same euro payment, different lek cost
Assume a EUR 400 payment. At ALL 100 per EUR, it costs ALL 40,000; at ALL 110, it costs ALL 44,000. That is ALL 4,000 more each month with no change to the euro payment. These are hypothetical rates, not current quotations or forecasts, and exclude conversion fees. Check the rate actually applied by the bank.
| Payment | Assumed exchange rate | Cost from lek income |
|---|---|---|
| EUR 400 | ALL 100 per EUR | ALL 40,000 |
| EUR 400 | ALL 110 per EUR | ALL 44,000 |
Illustration, not a bank offer. These figures are assumptions used to explain the calculation.
Initially fixed is not fixed for the whole term
A fixed rate stays unchanged for the contractual fixed period, which may be shorter than the loan. Afterwards a different formula may apply. A variable rate combines a changing reference with a bank margin. Albanian offers may reference Treasury bills (BTH) or Euribor for euro loans. Check the reference tenor, observation date and reset frequency.
How to read “reference plus margin, subject to a floor”
Assume reference plus 2.00 percentage points, with a 4.00% floor. A 1.00% reference gives 3.00% arithmetically, but the 4.00% floor applies. A 3.00% reference produces 5.00%. The floor is a minimum, not a cap. Ask separately about a ceiling and any treatment of negative reference rates.
Illustration, not a bank offer. These figures are assumptions used to explain the calculation.
Test both changes together
Enter amount, term and an assumed rate in the calculator, then test a higher rate. If income is in another currency, also enter an exchange rate and inspect the income-currency payment. Ask the bank for an adverse-scenario schedule. Today’s APR does not predict future exchange or reference rates; this exercise shows budget sensitivity, not a forecast.
Questions to take to the bank
Use this list when requesting your written offer.
- Which currency are my reliable earnings in?
- What is the formula and reset frequency?
- Which exchange rate applies, and is there a conversion fee?
- What happens if both interest and the exchange rate rise?
Frequently asked questions
Is borrowing in euros always cheaper?
No. Compare the full cost and its effect on your income. A lower rate does not remove exchange-rate exposure.
Does the calculator predict future exchange rates?
No. You provide assumptions; the result only shows what those numbers would imply.
Sources and examples
Bank of Albania: exchange and interest-rate risk disclosure ↗
Links beside specific explanations identify their official sources. Worked examples are educational assumptions, not bank offers. The bank confirms the terms for your situation.