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TAN-APR: what do they mean.

The interest rate is the percentage of a loan that allows you to calculate the amount of money that must actually be returned to the credit institution which granted funding. The interest rate is, therefore, the cost of financing or the remuneration paid to the company credit for its services. Given its definition and its importance, it is therefore immediately apparent the need to take into account this parameter with the greatest care in order to navigate and select the best in the face of numerous proposals present on the market.

First of all you must specify that there are two kinds of rate that we must consider:

· TAN or the annual rate,

• The APR or annual percentage rate (also known as ISC or Synthetic Price Index ).

The TAN is the interest rate, expressed as a percentage on an annual basis, applied to capital funding. It is a very important parameter because it allows to calculate from the amount financed and the loan period, the share of interest paid will sponsor the institute. The share capital plus the share of interest represents the portion of the installment to be returned monthly.

By itself, however, the TAN is not able to make us feel the real advantages and disadvantages of a specific proposal for a loan, nor to make a fair comparison between two or more proposals for funding. This is because the TAN does not take into account the associated costs of funding.

For this reason, we appeal to the so-called APR which is a measurement of the total cost of financing. This parameter is expressed in percentage terms on an annual basis. Unlike using the TAN, the APR includes incidental charges, such as, for example, costs of investigation and insurance costs that are charged to the customer. When you request a loan monitor and compare the value of the APR is an important element but also a right of the applicant. The law n.262/2005 established fact that the financing transactions, however denominated, any bank or financial services to advertise the annual percentage rate. Before the APR had to be marketed only for the consumer credit hours for all financing operations by law must contain all interest and charges to the consumer. Every three months, in addition, the Treasury Department notes the average APR charged by banks and finance companies for all transactions, including, of course, loans. This is all done to protect consumers to see if they are charged usurious rates, which are 50% higher than the average.

The APR therefore provides the most comprehensive indicator of the amount which will be taken to repay the installment and this also allows you to make the necessary comparisons to select the best financing. Importantly, the comparison between different loans, to be meaningful, it must always be equal to the sum required and the period for repayment of the loan.