When going to ask for a loan or a mortgage, surely in the advertising of banks and savings banks you have seen references to this data: the Nominal Interest Rate (TIN) and the Equivalent Annual Rate (TAE).
Both commissions must be paid when you hire a bank product and they refer to the mortgage interest rate, that is, the money that the financial institution charges you for lending you money.
Next, we explain in detail how both concepts of a loan or mortgage affect each other.
What is the difference between TIN and TAE?
The Nominal Interest Rate or TIN is the price we pay for a loan, that is, the money that we have to pay the bank for the borrowed capital. On the other hand, the Equivalent Annual Rate (TAE), encompasses the commissionsthe term of the operation and the own TIN of the credit that we want to request.
Therefore, the TIN is the specific percentage of the total amount lent by a bank to establish the parameters of a financial operation. In addition, this interest is calculated on a monthly basis.
The Equivalent Annual Rate or TAE, for its part, was introduced by the Bank of Spain to establish a form that would allow the cost of harmonized banking products to be compared. It is calculated with a formula that takes into account, in addition to the TIN, the frequency of payments, the operating expenses and the bank commissions for amortization or cancellation of the product.
What is more important to the consumer: the TIN or the TAE?
The TIN can be an informational indicator, but it doesn’t really do much for the consumer, as it the TAE provides a more accurate vision and clear of how much an investment contributes or how much does a credit cost us.
For practical purposes, the APR is a very useful index for consumers to know if the mortgage loan offered by the bank is in good condition or not and to compare offers.
