8. Bank Loans in France

1. 8.1. Rules of Eligibility
   8.2. Rates and Charges
   8.3. Types of Loans
   8.4. Annual Percentage Rate
   8.5. Debt Problems

8.4. APR in France - Taux Effectif Global (TEG)

The real rate of interest on your loan is measured by the Taux Effectif Global (TEG).

The TEG includes the cost of fees associated with the loan.

The TEG is highly regulated and offers a strong degree of protection to consumers against lenders who may seek to misrepresent the true rate of interest on the loan.

Perhaps of equal importance it also offers lenders the opportunity to make genuine comparisons on the rates offered by different lenders.

The use of the TEG is mandatory in all advertising by lenders.

It comprises all the obligatory costs associated with taking out the loan.

Where the loan has no legal, administrative or insurance costs then the TEG can only be the nominal rate of interest.

Where the rate is fixed then the TEG is easily determined.

However, where rate is variable then the advertised rate is only that for the first period of the loan, whether that is the first quarter or first year, depending on duration of the fixed period.

Where the rate is variable then the law requires that the modalities and frequency of change are made clear in the written offer.