The overall effective rate first responds to the legislator’s desire to protect the borrower. It is mandatory and must be included in the prior offer . It includes all the costs that go into the calculation of the cost , ie the nominal rate, the insurance, the guarantee costs and the fees.
Namely: the brokerage fees must appear in the TEG.
This is therefore the only reliable indicator for comparing loan proposals, provided you do not make any subsequent changes, which is sometimes the case thanks to the modularity of current home loans. Thus it is quite possible that a proposal with a low nominal rate is revealed after analysis of the TEG, more expensive in reality than a competing proposal with lower ancillary costs.
The wear rate
The interest rate must not exceed the rate of attrition set by the Banque de France. Each quarter, the central bank publishes the threshold of wear that sets the maximum limit. This rule therefore applies to the calculation of the overall effective rate and is assessed at the time the loan is granted.
Case of revolving credits
In the case of a revolving credit or a bank overdraft, the appraisal is not made at the time of the offer, as for a home loan, but on the closing dates for the collection of interest.
The elements that go into the calculation
The nominal rate
This is the one indicated in the commercial proposal. It is generally non-insurance and corresponds to the percentage of remuneration that the lender takes.
In the amortization table, the interest portion of the monthly installment is calculated on the basis of a proportional rate, ie the nominal rate divided by 12. In the case of a home loan variable, it is the starting rate which is used for the calculation of the TEG. It is only given as an indication since it is impossible to determine the evolution of the reference indices in advance.
After interest, this is the element that most impacts the cost of your loan . We advise you not to be satisfied with a tariff approach. Indeed, the choice must focus on guarantees. Read the documents carefully before committing yourself, especially the chapter on exclusions in the general conditions. You can compete and freely enter into a contract outside the bank if the guarantees are equivalent or superior.
Good to know: the integration into the overall effective rate can be complex depending on whether the contribution of your insurance contract contribution is on the borrowed capital or capital remaining due.
The cost of the guarantee depends directly on the type of coverage required by the bank. For example, a mutual guarantee or lien registration will cost less than a mortgage. Real collateral (IPPD and mortgage registration) are also more restrictive and require a release in case of early repayment.
They are at the discretion of the lending institution and are used to cover expenses related to the constitution of the file and the risk analysis. They are of the order of 1%, capped according to the loan amount. Even if they do not have a great impact on the overall cost, know that they can be negotiated, especially if you subscribe to several banking contracts (savings, insurance …)
Good to know: there is no charge on a PTZ.
The LAGARDE reform introduced the notion of APR for consumer credit. The new regulations apply since May 1, 2010 (Article R313-1, amended by Decree No. 2011-135 of February 1, 2011 – Article 1). The elements entering in the calculation of the TEG are specified in the article Article L311-1 modified by Law n ° 2010-737 of July 1, 2010 – art. 3.