# Annual performance: everything you need to know (credit encyclopedia)

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In the case of a loan, the annual payment indicates the total amount paid by the borrower to the lender in one year. The annual payment is made up of interest and repayments. Any unscheduled repayments made are also included in the annual payment. The more general term for the annual payment is annuity.

The annual payment can also be seen on the annual account statement. Many banks send the annual account statement with payments made this year at construction financing automatically.

At the installment loan on the other hand, borrowers often do not receive an annual account statement automatically. However, the repayment of the loan can often be viewed via a portal or app, even for installment loans.

## The differences between interest, repayment and annuity

### Interest charges

The interest is the fee for the borrowed money. As you continue to pay off the loan with each monthly installment, the interest becomes lower and lower at the end of the loan term. However, since the loan installment remains the same, more money flows into the repayment, which further increases the effect. Thus, you pay off the loan faster towards the end than at the beginning.

### Repayment

Repayment is the repayment of the loan. The repayment continues to increase due to falling interest rates.

### Annuity

The annuity is the sum of interest and repayment, and is thus the amount you have to pay monthly to the bank for the loan. Therefore, the annual payment of a loan is composed of 12 monthly annuities.

## Calculation of the annual output

To calculate the annual payment, you need the initial loan amount, as well as the interest rate (un percent) and the repayment rate (also in percent). The annual payment is then calculated using the formula:

``````Annual payment = Initial loan amount x (interest rate + repayment rate) / 100

``````

### Example of calculation of annual output

The initial loan amount is 200,000 euros. Of this, a residual amount of 150,000 euros is still to be repaid. The repayment is 3.5 % and the interest is 3 %.

``Annual output = 200.000€ x (3+ 3,5) / 100 = 13.000 €``

## Special feature: Annual payment for amortizing loan

With an amortizing loan, the monthly repayment remains constant and is not increased when interest payments fall, as is the case with an annuity loan. Thus, unlike an annuity loan, the annual payment on an amortizing loan decreases each year. Repayment loans have become very rare nowadays, however, and are hardly ever granted.