Como comparar propostas de crédito com TAEG e MTIC?

How to compare credit proposals with APR and total cost?

If you are in the process of applying for a loan, you should inform yourself in advance about the terms used so that you make the best financial decision. Comparing proposals before choosing the right credit conditions is essential. But what is the most realistic way to do it? That's what we will explain in this article.

25 Oct 20234 min

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Why not seek help so you can compare credit proposals more confidently? The credit intermediaries from Poupança no Minuto provide a free service that mediates between you and the banks, saving you from bureaucracy and helping you make the best credit decision. But let's first understand how to compare simulations from various banks.

What is the Annual Effective Global Charge Rate?

The Annual Effective Annual Rate (AEAR) represents the cost that a credit has for the client annually, as a percentage of the amount borrowed.  

In itself, APR includes charges such as: 

  • The interest;
  • The commissions;
  • Expenses associated with credit, such as taxes, mortgage registration, among others; 
  • Required insurance;
  • Current account maintenance fee, if applicable;  
  • If using an unbound credit intermediary, their remuneration;  
  • Other charges associated with the credit in question.

There is still the Annual Nominal Rate (ANR) which represents only the interest of a loan, while the APR includes all charges related to credit.  

You can find the APR in the pre-contractual information initially provided, through the Standardized Information Sheet (SIS), in consumer credits, under "Credit cost", or in the Standardized European Information Sheet (SEIS), in the case of housing or other mortgage credit, under "Interest rate and other costs".

What is the Total Amount Imputed to the Consumer?  

The Total Amount Imputed to the Consumer (MTIC) represents the total amount that a customer has to return to the bank throughout the entire term of the credit agreement.  

This is the conjunction of the loan amount with credit costs (APR - interest, commissions, taxes, and other charges associated with financing).  

At the moment you contract credit, it is important to analyze this measure. However, for example, in loans with variable or mixed interest rates, the rate may change throughout the contract, so in these cases, the APR is only indicative.

The MTIC can also be found in FIN in the case of consumer credit, as "Total Amount Charged to the Consumer", and in FINE for mortgage loans, as "Main Loan Features - Total Amount to Repay (MTIC)".

Note that information regarding the APR is also mentioned in advertising campaigns that refer to an interest rate or other charges related to the cost of credit.

TAEG and MTIC: Two measures to compare credit proposals  

Both the APR and the TCC are two essential measures when comparing credit proposals, when the characteristics of credit are similar.  

So, note that, in a loan with the same amount, term, and repayment method, the proposal with the lowest APR and TCOC is the cheapest proposal for a customer.

If a proposal presents a higher interest rate, it will have a higher TCC, as the interest is higher, and a proposal with a longer term will have a higher TCC, compared to a similar credit with a shorter term.

In other words, when comparing the cost of various credit proposals, one should not only look at the spread because other charges related to credit may have more weight. Credit with the lowest spread is not always the least costly for a customer.

Warning: it is the APR and the CECT that encompass all costs of a credit contract, so they are the most realistic regarding the total amount you will pay for the loan. By taking into account interest, commission costs, taxes, insurance, and other associated expenses, you will have a better idea of the cheapest credit by contrasting the value of these measures in each proposal that banks present to you.

If you need help with this comparison and choosing the right credit proposal for you, cheaper or with the most suitable conditions, you can always turn to a credit intermediary.  

With Savings in a Minute as a credit intermediary, you may achieve a lower need for engaging products and bonuses. This information may not be included in the FINE, as banks place the value of MTIC and TAEG based on the reference they have available. But the savings can be significant.

Hire Poupança no Minuto intermediaries and enjoy a free service and agents available to accompany you throughout the credit contracting process. Save money, time, and spare yourself bureaucracy!

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