Which Turkish Loans Carry KKDF and Which Carry BSMV?

Which tax is added to a loan depends on the loan type. Consumer and car loans add 15% KKDF and 15% BSMV to the interest, which is 30% on top. Home loans carry no KKDF, and no BSMV if no home is registered in your name on the deed. Business lira loans pay 5% BSMV.

Which loan types carry which tax?

The loan type decides which tax is withheld. The KKDF rate is set in Council of Ministers Decision No. 2010/974 and the BSMV rate in Presidential Decision No. 7345 (KKDF, BSMV).

The BSMV exemption for home loans depends on having no home registered in your name on the deed at the date of the loan; if you do own one, 15% BSMV is added to the interest. On a commercial loan the general rate applies.

A loan for a shop or office bought as an investment also counts as a consumer loan, and the consumer loan rates apply to it.

How is a loan instalment calculated?

Banks build the monthly instalment by adding KKDF and BSMV to the interest that accrues on the remaining principal. To find the monthly rate including taxes you multiply the contract rate by (1 + KKDF + BSMV); the instalment is then spread evenly over the term (loan instalment, steps in the formula).

In the repayment plan the interest share falls each month and the principal share rises. You pay the first instalment one month after drawing the loan, on the same day of the month.

On a consumer loan the arrangement fee (tahsis ücreti) can be at most 0.5% of the loan amount, and BSMV is added to the fee as well. The annual cost rate the bank publishes puts interest, taxes and fees into a single figure (annual cost rate).

What is the instalment on a 100,000 TL loan?

For example, a 100,000 TL consumer loan at 3% monthly interest over 12 months is repaid in monthly instalments of 10,593.48 TL. Total repayment is 127,121.80 TL, of which 20,862.94 TL is interest and 6,258.86 TL is KKDF and BSMV. With a 500 TL arrangement fee and 75 TL of BSMV on the fee, the annual cost rate is 60.09%; without the fee it would be 58.27%.

For example, run the calculation the other way: someone who can pay 20,000 TL a month can borrow 308,085.44 TL over 24 months at the same interest rate (loan calculator).

Example: consumer loan at 3% monthly interest (KKDF 15%, BSMV 15%, arrangement fee 0.5%)

How much do I save by repaying early?

The gain from closing a loan before the end of its term depends on how many instalments you have paid. For example, on a 100,000 TL loan over 24 months at 3% monthly interest, the remaining principal after 12 instalments is 61,280.14 TL. The remaining 12 instalments total 77,900.46 TL; if you close the debt at that point you do not pay 16,620.32 TL of interest and taxes (the example assumes no early repayment fee) (early repayment calculation).

Because the withholding rates change with the loan type, compare annual cost rates rather than instalments when you shop around.