Functions of the APR
The notion of effective rate describes a quantified indicator, which includes the nominal rate of a credit, plus the costs directly related to the subscription of this credit. By a harmonized definition, the effective rate allows the comparison of different credits between them.
It is an actuarial rate, calculated according to the equivalence method (unlike the total effective rate , or TEG, used for other credits, especially for professionals), which is calculated on a proportional basis, as recalled the Court of Cassation on November 27, 2013).
It is therefore a standard indicator 1 calculated in the same way by all lenders to allow the consumer to make comparisons between loans offered by different credit institutions , directly or by iobsp .
It includes all costs (including interest) that the borrower must pay in addition to the borrowed capital.
Like all effective rates, the APR compares credits in order to quantify their respective prices (costs) on a comparable basis.
The APR is an indicator of the price of a loan.
Credit cost limitation function
Like all effective rates, the APR aims to cap the price (cost) of loans. Indeed, the APR of a credit can not exceed the expected rate of wear for the category of credits to which it belongs.
The APR allows a cap on the cost of a credit for the borrower.
In the European Union
It has been used for consumer credit since 23 April 2008 (Directive 2008/48 / EC). These credits concern only individuals.
The annualized annualized percentage rate, or APR , replaces the TEG as the legal indicator of the effective rate of mortgage loans to individual borrowers , since March 21, 2016, with Directive 2014/17 / EU of February 4, 2014.
In accordance with the European banking regulations (above), the APR has been used as the effective rate for consumer credit since 2002. It is also the effective reference rate for mortgages since 21 March 2016 (deferred at 1 st October 2016 for France).
The APR is the effective rate used for all loans to individuals since 2016.
Prior to March 21, 2016, home loans to individuals used the Global Effective Rate or TEG . These contracts will be executed for several more years, during which the new real estate loan agreements with TAEG and the old ones, with TEG, will coexist.
The APR must appear in advertisements as well as in previous offers of credit 2 .
Notes and references
- ↑ defined by the European directive 98/7 / CE http://admi.net/eur/loi/leg_euro/en_398L0007.html [ archive ] .
- ↑ http://vosdroits.service-public.fr/F2456.xhtml [ archive ] .