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What Do The Acronyms TIN and TAE Mean?

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What Do The Acronyms TIN and TAE Mean?

More than once you have been watching TV at home and wondering what the acronyms TIN and TAE in the advertisement mean. And they repeat them over and over again. These two acronyms are essential to know when you are going to ask for a loan. However, in most cases, people don’t know what they mean. Therefore, in today’s article, we are going to detail what they refer to.

 

TIN (Tipo de Interés Nominal) or Nominal Interest Rate

It corresponds to the remuneration that the lender will demand from you for assigning part of its capital temporarily. It is what we call the interest, that is, the part of the loan that you as a debtor will have to pay later for having received the loan.

 

TAE (Tasa Anual Equivalente) or Equivalent Annual Rate

Represents the effective cost of the loan as a percentage of the capital borrowed and includes, in addition to the interest applied to the loan, the term of the operation, and other commissions and expenses directly associated with it. Since 1990, all banks in Spain have been required to publish the TAE. That way it is easier to compare the offers provided by different entities.

Once you know what the acronyms mean, you will realize that it is more interesting to know the TAE, since it includes everything. It is more like reality, that is, the real and total cost. If we only stay in the TIN and do not check the TAE, we will think it is cheaper.

 

In the advertising of any mortgage loan, the concepts that usually appear in large letters are the fixed interest rate, that is, the TIN. The rest of the expenses attached to the loan are not taken into account here. They do appear in the TAE.

 

Estimation of TAE

Although it is not correct, the interest that appears in the advertisement may be that of the TIN. As we already know, this does not help us if what we want to know is the total expenses associated with the loan. The TAE calculation is complicated, so we recommend this calculator from the Bank of Spain.

 

Now that you have an essential piece of information to consider and know what to use to calculate it, don’t get carried away by the first thing they offer on television!

 

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