By Charlotte GAUCHON
22 March 2025
Credit 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. Although borrowers are often unaware of this indicator, it plays a decisive role in comparing credit offers and can provide powerful legal leverage in the event of a dispute. The TEG is not strictly speaking an interest rate, but a comparative indicator defined in articles L.314-1 to L.314-9 of the French Consumer Code. Article L.313-4 of the Monetary and Financial Code describes it as «a rate representing the total cost of credit, expressed as an annual percentage of the amount of credit granted». Its main function is to enable borrowers to compare different credit offers objectively. For consumer credit, it takes the form of a...
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