Overall effective rate
TEG and TAEG: calculation, mandatory disclosure and penalties for rate errors
By Charlotte GAUCHON17 June 2025The Taux Effectif Global (TEG), and its equivalent for consumer credit, the Taux Annuel Effectif Global (TAEG), represent much more than just a percentage on a loan contract. It is the key indicator of the real cost of your financing, a central notion in the lender's remuneration. This tool, required by law, has been designed to enable you to compare credit offers transparently and to protect you against abusive practices. However, it is complex to calculate and mistakes are common, leading to penalties that can be severe for credit institutions. Understanding how it works is therefore essential for all borrowers, whether individuals or company directors. Understanding the TEG and TAEG: definition and fundamental role The Taux Effectif Global, or TEG, has a clear mission: to provide a complete overview of the cost of a loan. For...
The components of the TEG: what is included and excluded
Credit and consumer law, Annual percentage rate of chargeUnderstanding the components of the Total Effective Rate (TEG) is essential for any borrower. This rate, which is used to compare the real cost of borrowing, includes much more than just interest. Certain costs are systematically included, while others are excluded. These distinctions can have significant financial and legal consequences....Informing borrowers of the TEG: legal obligations and issues
Credit and consumer law, Annual percentage rate of chargeCredit mechanisms are based on a natural imbalance between lender and borrower. The law attempts to correct this asymmetry by imposing strict obligations to provide information, particularly on the Total Effective Rate (TEG). Understanding these obligations protects your rights as a borrower and may, in certain situations, enable you to dispute charges...Penalties for errors or omissions in the TEG: developments in case law
Credit and consumer law, Annual percentage rate of chargeThe Total Effective Rate (TEG) is often at the heart of disputes between borrowers and banks. Case law has changed considerably in recent years, altering the balance between protecting borrowers and ensuring the legal certainty of loan contracts. Developments in civil penalties Historically, the courts declared the nullity of the clause...Usury in credit law: understanding and protecting yourself
Credit and consumer law, Annual percentage rate of chargeAny financial transaction can quickly fall into the trap of excessive interest rates. Alongside the TEG (Taux Effectif Global), usury constitutes a legal bulwark against abuse by lenders. But what exactly does this concept mean under French law? When does a rate become usurious? Who can claim usury? Legal definition...Penalties for loansharking: criminal and civil consequences
Credit and consumer law, Annual percentage rate of chargeFrench legislation strictly regulates the cost of credit. It protects borrowers against excessive rates by means of a comprehensive repressive system, particularly in terms of usury. A loan becomes usurious when its total effective rate (TEG) is more than one-third higher than the average rate charged by credit institutions...The Total Effective Rate (TEG): definition and calculation methods
Credit and consumer law, Annual percentage rate of chargeCredit always costs more than the banks say it will. The nominal interest rate only reflects part of the reality. Hence the existence of the Taux Effectif Global (TEG), the cornerstone of banking transparency. This indicator, often unknown to borrowers, nevertheless plays a decisive role in comparing...
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