Que es el tin y el tae

interest rate

The NIR or nominal rate is, in itself, the interest applied by a financial institution or lender for the service of lending money: it simply indicates how much the bank will keep for the transfer of funds.

Each bank is free to apply the NIR it wishes to charge its customers for each type of loan, and this is agreed with the applicant for the loan, mortgage or deposit contract: it therefore reflects the interest payment for the change in the value of money over a period of time.

Mortgage loans are financial products offered by banks for the purpose of financing real estate: financial institutions offer mortgage loans with fixed conditions (with an invariable APR) or variable conditions (with an APR composed of the sum of the EURIBOR and a spread).

The Annual Percentage Rate is the index that reflects the total costs of the loan of funds, i.e.: the interest fixed by the financial entity, the commissions, the management costs or the terms of the operation.

tae spain

The Nominal Interest Rate, better known by its acronym TIN, is the fixed percentage that we agree with the bank when we receive a sum of money lent. That is, the cost of the bank lending you the money. To calculate it, the Euribor is added to the differential applied by the bank.

The APR or Annual Percentage Rate, unlike the NIR, considers in its calculation the costs of the operation. That is to say, in addition to the TIN interest rate, the APR adds the other costs of a mortgage. For example, costs such as the frequency of payments, the opening commission, the bank’s commissions for cancellation or amortization, or the links that may be required.

The APR allows us to compare the offers made by different banks and gives us a broader and more accurate view. But we should not be guided only by the APR, since it is not a perfect index and a mortgage is much more than the interest rate.

Therefore, when applying for a mortgage, remember not to focus only on the APR. Hidden commissions increase the final cost and can be detected if we use the APR as a reference indicator, since it is more in line with reality than the nominal interest rate. But, if you prefer, in Financia y Soluciona we can guide and advise you to find the mortgage that best suits your needs.

tin spain revolut

You will frequently see the tin and tae values when contracting financial products. It can occur both for the contracting of products (consumer loans or credits, financing or refinancing of debt, mortgage, etc.) and for investment products (fixed term deposits, savings account, investment fund, etc.). Consult the variable parts, know each one of the expenses, ask about the binding products. Failure to comply with some of the conditions may result in a penalty in the interest to be received, and may even result in a negative APR.

Currently there are a lot of cases of banks referring to the TIN value to draw the consumer’s attention. But the APR interest rate, which includes expenses and commissions, is no longer so attractive. To invest with lower risk and better interest rates, consider investing in a time deposit or savings account.

Now let’s suppose a case very similar to this one but introducing a variation: now the settlement and payment of interests instead of being annual is on a half-yearly basis. In this way, the depositor will receive 200 euros (half of the 400 euros of annual interest) at the end of the first six months. To this will be added the 200 euros at the end of the 12 months, together with the 10,000 euros of principal. With these data, the final capital would be: 10,000 euros x [(1 + 0.04/2)]² = 10,404 euros. In this case the TIN (4%) does not coincide with the APR (4.04%) because the interest received at the end of the first semester was reinvested.

annual percentage rate

In many financial products, such as personal loans, mortgages, deposits or pension plans, the APR and/or the APR are mentioned, but what are these acronyms that almost always appear together and that everyone has heard of? What do they calculate? Do they refer to the same parameters?

The answer is no. But it is worth starting at the beginning. The interest rate is the price of money. That is, what you are going to pay the bank in case you borrow an amount, as in a mortgage, or what you are going to get for lending, as in a deposit.

On this basis, the Nominal Interest Rate (NIR) is the money that will be paid or received over a certain period of time, i.e. the life of the financial product. The NIR is usually calculated on a monthly basis.

For example, in the case of a loan, the NIR is the interest that has been agreed with the bank to be paid each month for receiving the money requested. In other words, the monthly payment is made up of the part of the loan that is being repaid to the bank plus the NIR.