Disagio

A disagio is a negative difference between the face value of a security or loan and its actual, lower price. The term is often used in relation to personal loans and bonds. An agio, on the other hand, is a positive difference between the face value of a security or loan and its actual, higher market value.

A disagio is normally shown as a percentage of face value.

Example: A 4% disagio is applied to a 1000-franc loan. So the borrower only receives 960 francs (1000 – 4%*1000) paid out.

A disagio makes a loan more expensive for a borrower. Disagios are not accounted for in nominal interest rates, which are based on the higher face value. Because of this, they can potentially add a “hidden” cost to a loan. However, disagios are accounted for in effective annual interest rates.

More information:
Trading comparison
Private banking comparison
How to buy stocks: best trading tips

About moneyland.ch

moneyland.ch is Switzerland’s independent online comparison service covering banking, insurance and telecom. More than 80 unbiased comparison tools and calculators are available on moneyland.ch, along with useful financial guides and timely news. The comprehensive comparison tools help you to find the right insurance policies, bank accounts, credit and prepaid cards, loans, mortgages, trading accounts and telecom products for your needs.