Introduction to APR Calculation

Annual percentage rate (APR) refers to the yearly interest generated by a sum that's charged to borrowers. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction over and above the interests. The APR provides consumers with a bottom-line number they can compare among lenders, credit cards, or investment products. In the French and Tunisian regions, the APR is also called as TEG or TAEG (Taux Effectif Global). The real rate of interest on your loan is measured by the Taux Effectif Global as it includes the cost of fees associated with the loan.

The difference between TEG and TAEG resides in the calculation formula: TEG is standard annual rate calculation, but TAEG simulates capitalisation of interests for periodic schedules.

This module allows banks to calculate the TEG or TAEG as per French Regulations for loans and overdraft and calculation of TEG as per the Tunisian regulations for loans. It also ensures to validate the calculated TEG or TAEG against the Maximum Legal Rate (MLR). The Periodic Charges that are configured as a part of the product are automatically adjusted on the respective frequencies by comparing the TEG / TAEG with the MLR.

The module also supports calculation of TEG as per Tunisian Regulations for Bullet Loans when the entire principal is repaid in full on maturity.

Click here to understand the terms and abbreviations used in describing this module.