Often, when you need a loan and start taking a look at the various proposals, you find yourself reading “strange” acronyms like Taeg and Tan . You always wondered what they are, right? The time has come to clarify, so you will discover not only what they are but you will also understand the fundamental role they play in choosing a loan rather than another.
First of all, the Tan and the Taeg are important indicators used to calculate the cost of the loan, that is how much you will actually pay in terms of expenses the requested loan .
- 1 What is the Tan?
- 2 What is the Taeg?
- 3 Tan and Taeg: which is more convenient?
What is Tan?
The Tan , Nominal Annual Rate , corresponds to the interest to be paid each year for the loan requested. Specifically, it is the amount due to the credit institution. It varies according to the amount of the loan and is usually not paid in a single installment but is deferred in small monthly installments within the loan installments.
Usually the French repayment plan is applied to the Tan . This means that initially the reimbursement of the Tan takes place at a higher rate and then decreases towards the end of the repayment of the loan .
What is Taeg?
The Taeg , Annual Global Effective Rate , represents all the costs and annual expenses to be incurred after receiving the loan. The Taeg therefore includes the costs of opening the account, the payment of the policies, stamp duties, communications and management fees.
The Taeg does not include optional ancillary costs , ie default interest, government stamps, non-compulsory insurance and any notary fees.
Taeg is not used for rate calculation but we need it to understand how much a loan can be cheaper than another.
Tan and Taeg: which is more convenient?
You must always pay attention: the Tan can never be higher than the Taeg and the Taeg itself can always be equal to or greater than the Tan. At most, the Tan can be zero if the loan is at zero rate . Even though it may seem convenient to you, you must be absolutely aware of the value of the Taeg because the costs and costs of the loan could be very high and, consequently, inconvenient.