Rate global manpower

See also: TEG (homonymy)

In fact the rate is supposed to represent the real costs for the customer user; it intêgre OBLIGATORY associated costs BY CONTRACT, namely fresh of files, various commissions, cost of particular guarantees. In practice, much of elements are presented in an optional way (example of the insurances) and are thus not integrated in the TEG. It is in addition necessary to still distinguish additional costs related to services (maintenance for example for an automobile credit) at the additional cost from insurance. The current practice is to develop products and solutions of financing being connected with hirings and not concerning the obligation to produce the TEG by contract. There is in this field a advance to make so that the professionals produce a level of information sufficient and clear. Business of communication, the rate, often proposed by the media concerns one generally short duration (12 or 24 months, duration not corresponding to a concrete intermediate duration of refunding of credit) and a promotional effect very limited in time and possibly revisable at the conclusion. The current legislation tends to clarify these processes by imposing the advertizing communication on a standard of the TEG on the one hand and by managing " the effect-annonce" while obliging the advertiser with a rigor and increasingly precise information in term of total costs of the operation of credit. Thus, the customer must be able TO INCLUDE/UNDERSTAND which is quoted to him and to financially weigh his taking risk and his engagement.

The rate global manpower or TEG was set up in order to make it possible to the consumers to compare on only one and even bases the proposals for a credit carried out by different finance companies.

Its principal interest is to standardize the way of calculating of the Interest rate of a Crédit and to integrate the totality of the ancillary costs into it. Interest rate then taking into account the totality of the credit charges, and being calculated same manner by each bank, it becomes possible to compare between them two different banks.

The credit which proposes the TEG low is the credit the least expensive after taking into account of the whole of the elements constituting the credit and made compulsory by the lender (fresh of file, guarantee (S), Assurance S…).

Note: the indication of the TEG is obligatory at the time of a proposal of credit or for a Publicité in connection with a credit. But attention, the organizations of credit often communicate on examples of appropriations without Assurance-décès Disability. Communicated rates TEG thus do not take account of the ADI which however is strongly recommended.

The TEG is the indicator of the overall costs of your loan. The TEG then enables you to make a financial synthesis and to evaluate of it in the form of a rate the overall costs of your loan. It is a good indicator which was founded to protect the consumer from all hidden expenses.

Calculation of the TEG “are equivalent”

This TEG applies to the totality of the appropriations, except those concerning the financing of the companies and the real estate.

Its way of calculating is defined by the R313-1 article of the Code of consumption :

it is an annual rate, in the long term fallen, expressed as a percentage and calculated according to the method of equivalence;
its precision is of at least a decimal;
the unit of period corresponds to the periodicity of the payments.

Remarks

In the case of irregular payments, the unit of period is that of the smallest interval of payments, without being able to be lower than one month.
the R313-1 article is the transposition in French right of the directive 98/7/CE of the the European Parliament and the council of the February 16th 1998.

The calculation of the rate global manpower is determined by the resolution of the equation known as of the made up Intérêts.

Calculation of the TEG “proportional”

The R313-1 article of the Code of consumption distinguishes a category of credit for which calculation must be carried out differently. They are the appropriations intended to finance the companies and the Immobilier.

Calculation must determine the periodic rate initially. The annual rate is then calculated by multiplying the rate of period by the relationship between the duration of the year and that of the unit period (either for a monthly installment, a multiplication by twelve).

See too

Ready real estate

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