▷ Tae y tin para tontos | Actualizado julio 2024

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CPI, PPS, Euribor, OPA… There are many economic terms that we hear or use practically every day, but there are two that are particularly unfamiliar despite the familiarity of their names: APR and NIR.

Every time we pass in front of a bank branch or consult the conditions of a loan or mortgage on the Internet, we come across these two acronyms. However, not everyone knows exactly what they are, how they are calculated and what they are for.

Although we colloquially speak of “the APR”, it is actually correct to say “the APR”, since it is the Annual Percentage Rate which, in the form of an annual percentage, reflects the cost or effective yield of a financial product.

For example, it is not the same to deposit our money in a deposit at 4% per annum instead of one at 2.5% per annum if afterwards we are going to have to pay commissions or cancellation costs that will increase the operation. To decide which of the two we are more interested in, we can resort to the APR.

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When we go to ask for a loan, we must take into account mainly two things: the Nominal Interest Rate (NIR), which is the price we pay for the money borrowed, and the Annual Percentage Rate (APR), which includes the commissions, the term of the operation and the NIR of the credit we want to apply for. Next, we are going to know all the details of how both concepts affect a loan or mortgage.

The Nominal Interest Rate or NIR is the price we pay for a loan, that is to say, the money we have to pay the bank for the capital borrowed. The NIR is, therefore, a specific percentage of the total amount lent by a bank to establish the parameters of a financial operation such as a mortgage loan. In general, the NIR is calculated on a monthly basis. The NIR must be indicated in any contract for banking products such as deposits, loans, credits or mortgages, since it is the price we are paying for them, as explained in this content of Finance for Mortals.

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This explains that asking for a fast credit to be paid in 30 days has a TAE of 100 or 1000% without a blink of an eye. Although they are proportionally expensive loans, their bad reputation is sometimes unjustified, since they are not so expensive either and in the end we pay extra for their instant nature, since having a loan in 15 minutes without credit checks is a high-risk investment. This also applies to investors: a 3000% mini-loan will not make you rich, although its return is more immediate, so are its risks.