The stated interest rate describes only part of the expenses. The total cost of credit (TCC) also includes commissions, mandatory service fees, insurance if it is a condition of issuance, and takes into account the repayment schedule. Therefore, TCC is almost always higher than the nominal rate, and sometimes significantly higher.
The indicator was introduced specifically for comparability: two offers with the same rate can differ in actual cost by one and a half times due to accompanying payments. Comparing loans by rate in advertising is pointless, as is comparing by monthly payment size, since it depends on the term: by stretching the loan, you can reduce the payment and simultaneously increase the total overpayment.
When reviewing a contract, it makes sense to check three things: what exactly is included in the TCC calculation, which payments are mandatory and which are presented as voluntary, and how the cost will change with early repayment. Insurance that is voluntary on paper but affects approval or rate is economically part of the loan cost regardless of how it is named in the documents.