How this works
A car or personal loan amortizes on the French system, with a constant instalment. From the financed amount (P), the term in months (n) and the TAN, you get the monthly rate i = TAN / 12 / 100 and the instalment M = P·i / (1 − (1+i)⁻ⁿ). The TAN gives you the interest; for the real cost of the loan it is the TAEG that matters — the effective rate that folds in fees, insurance and compounding. Here you can add those charges, see the estimated TAEG and the MTIC (everything you pay), and compare them against the Banco de Portugal quarterly usury cap.
- 1
Monthly interest rate
The TAN is annual and nominal. Divide by 12 and by 100 for the monthly rate: i = TAN / 12 / 100. This is the rate that amortizes the capital month by month.
- 2
Instalment (French system)
The instalment is constant: M = P·i / (1 − (1+i)⁻ⁿ), where P is the financed amount and n the number of months. Early on you pay more interest and less capital; later, the reverse.
- 3
Total and interest
The total of the instalments is M × n. Interest paid is that total minus the capital: interest = M·n − P. A longer term means a smaller instalment but more interest overall.
- 4
TAEG and MTIC
Add upfront fees and a monthly insurance premium and the effective rate rises. The estimated TAEG is the annual rate that equates the amount received to the stream of payments. The MTIC is the total amount charged to you: everything you pay (instalments + insurance + fees).
- 5
Usury cap
Banco de Portugal sets a maximum TAEG each quarter for each type of consumer credit. We compare the estimated TAEG against that indicative ceiling — but always confirm the value for the quarter in force.
Frequently asked
What is the difference between TAN and TAEG?
The TAN (nominal annual rate) is just the loan interest and is what feeds the instalment formula. The TAEG (the APRC, effective overall annual rate) adds fees, associated insurance and the effect of compounding — so it is always equal to or higher than the TAN. To compare offers from different banks, look at the TAEG, not the TAN.
Why is the TAEG higher than the TAN even with no fees?
Because the TAN is nominal and the TAEG is effective. The TAN is divided by 12 and compounds monthly; the equivalent annual rate is (1 + TAN/12)¹² − 1, which is slightly higher. With fees, insurance and stamp duty the gap widens.
What is the MTIC?
MTIC is the total amount charged to the consumer: everything you pay from start to finish. It is the amount of credit plus the total cost of credit (interest + fees + insurance + taxes). It is the figure that best shows what the loan costs you in total.
Is the TAEG shown exactly the bank’s?
No. It is an estimate from the values you enter. The legal TAEG also includes stamp duty on the credit and on interest, plus every mandatory fee and insurance in the contract — not all of which are captured here. So the real TAEG and instalment tend to be a little higher. For the exact figure, ask the bank for the FINE (the European Standardised Information Sheet).
What is the usury cap?
It is the legal ceiling for the TAEG. Banco de Portugal publishes, every quarter, a maximum TAEG for each type of consumer credit (new car, used car, personal loan, cards, etc.). A contract with a TAEG above that ceiling is deemed usurious. The values prefilled here are indicative and editable — always confirm the table for the quarter in force at Banco de Portugal.
DISCLAIMER
An estimate for orientation. The instalment uses the TAN via the annuity formula; the TAEG and MTIC are approximated from the fees and insurance you enter and do not include stamp duty on the credit and on interest, so the real figures tend to be higher. The usury caps are indicative and change every quarter — confirm the table in force at Banco de Portugal. For the exact figure, ask the bank for the FINE. Not financial advice.