Interest calculation loan – TAN, TAEG, how much do I really pay?
The loan interest calculation is very useful if you intend to ask for a loan that will have to be repaid in months or years.
Opening a loan is never a simple decision: often, this option is chosen for an immediate economic need, which cannot be postponed. However, requesting a loan also means being in debt with the bank or financial institution that grants the loan: it is therefore preferable to prepare in advance, comparing the offers, increasingly present even online, and choose the best one. To be able to compare better, the calculation of online interest is an important step.
First of all, however, you need to decide which interest rate to calculate. Generally, two are considered: the TAN , Nominal Annual Rate, and the APR , Effective Global Annual Rate. Knowing the differences between these two interest rates is fundamental: the bank will probably indicate the TAN in its offer, but in reality the APR is a more comprehensive measure of the expense that awaits you.
The TAN is in fact the effective rate that will help determine the amount of each installment, and therefore of your payments to return the loan received. This rate is determined on an annual basis as a percentage of the capital disbursed by the creditor institution. As such, this is the rate you will be presented by the bank you contacted. However, care must be taken because you will have to face other expenses that the TAN does not indicate.
This role is played by the APR, a rate that is not used to determine the installment, but takes into account the incidental expenses to which the applicant will need to be able to access the loan (preliminary costs, practical closure costs, mandatory insurance costs, tax charges as stamp duty and other expenses). And online calculation tools will often give you APR as a result.
Just enter the duration of the loan, amount of principal and installments, and less often, the frequency of the installments. At this point you can compare the result APR of the loan interest calculation with the TAN that the bank will offer you, to understand if this financing is really convenient . In fact, some expenses that are included in the calculation are excluded from the TAN: therefore the bank could present itself with an apparently convenient offer, but which in reality provides for significant additional expenses.