Financial terminology is full of terms that, for the most layman, can be difficult to understand. One of them refers to the Annual Interest Rate, or the TIN. It usually appears associated with the APR , or Annual Equivalent Rate. In this article we will discover what the TIN is . We are going to explain it in a simple way so that you can understand it and finally put an end to that complex language that is used in the world of finance.
What is the TIN?
The Nominal Interest Rate refers to the fixed amount as a percentage. This is agreed as a concept of payment for the money borrowed. In other words, it is a way of knowing the percentage that the bank receives for lending the money. It refers to the financial cost of a banking product, be it a loan or a mortgage. The TIN is a value that does not have to be annual, something that does occur with the APR. Generally the TIN is a monthly value. Although it can be, quarterly, semester or even daily.
It should be borne in mind that the TIN is not the total amount that you are going to pay for borrowing money from a bank. So it is not an excessively useful value for a customer. Of course, it never hurts to know. In addition, banking entities are required by law to make them known prior to contracting, whether of a loan or a deposit.
How to calculate the TIN?
Doing so is very simple. Suppose a customer has applied for a loan to buy a laptop for 1,900 euros, and the monthly TIN is worth 3.2 percent. If the following month he can pay the full amount of the loan, he would have to pay the result of multiplying both figures; which in this case would be 60.8 euros.
Normally the TIN is the same as the real interest . Which is dictated by European regulations from Brussels, but takes into account the value of inflation. Therefore, the TIN must always be taken into account when obtaining financing. However, the value that offers a clearer view of interest is the APR, which already encompasses the TIN.
Training, the best way not to get lost
As we have mentioned, financial terminology is full of concepts that can be complex to understand. Failure to do so may result in us purchasing some products blindly, paying higher interest for them. The only way to stop being a lay person in these matters is to periodically visit this blog . Here you will find financial information explained in simple and easy to understand language.
You don't need deep knowledge to do it. It is enough to pay some attention and know what is best for us when deciding on one option or another. Learn about the different products that we have selected for you, there are interesting options with an adjusted TIN.