What is the TAEG (APRC)?

What is the TAEG?

The TAEG (Taxa Anual de Encargos Efetiva Global, Portugal's APRC, annual percentage rate of charge) is the annual percentage that sums up the total cost of a credit in a single number¹. Unlike the TAN, which shows only the interest, the TAEG also folds in all the mandatory charges of the credit: commissions, fees and required insurance.

That is exactly why the law makes banks quote the TAEG on any credit offer: it is the number that lets you compare different offers on a single measure.

What is the difference between the TAN and the TAEG?

They are two rates answering different questions:

• The TAN (nominal annual rate) reflects interest alone.
• The TAEG includes the TAN plus the commissions, fees and insurance tied to the credit.

Because those charges only add cost, the TAEG is always equal to or higher than the TAN. So, to compare two loans, look at the TAEG, not just the TAN: between two offers with the same TAN, the one with more commissions has the higher TAEG.

Rule of thumb: among similar offers, the one with the lower TAEG wins, as long as the term is the same. If the term differs, also check the MTIC.

How is the TAEG calculated?

The TAEG is the annual rate that equates, in present value, what you receive (the loan amount, less the fees paid upfront) with the sum of everything you pay (each instalment plus the monthly charges)²:

(amount − upfront fees) = sum of instalments and charges, discounted at the TAEG rate

It is an actuarial calculation set in law (Decreto-Lei n.º 133/2009, transposing the EU Consumer Credit Directive). It is not something you do in your head, which is why our TAEG calculator solves the equation from the TAN, the term and the charges you enter, and also shows the instalment.

What is the MTIC?

Alongside the TAEG, the bank quotes the MTIC, Montante Total Imputado ao Consumidor. It is the sum of everything you will pay over the credit: capital, interest, commissions and insurance¹.

The total cost of credit is the MTIC minus the amount you borrowed: what the credit costs you beyond the money received. It is worth looking at both numbers: the TAEG compares the cost per year, the MTIC shows the total cost in euros.

Worked example

Take a €150,000 loan with a 3.3% TAN over 30 years, with €1,000 of upfront fees and €30/month of charges (insurance + servicing):

• The capital-and-interest payment is €656.93.
• The total monthly outgoing rises to €686.93 (with the €30 of charges).
• With everything added, the TAEG is 3.777%, above the 3.3% TAN.
• The MTIC is around €248,296.

You can run this with your own figures in the TAEG calculator, and estimate the home-loan payment in the mortgage payment calculator. Before committing, also check that the payment fits your budget with the debt-to-income calculator.

Where to confirm your offer's TAEG

The TAEG and MTIC appear, in standardised form, on the FINE, the standardised information sheet the bank must give you before you sign the contract. That is where you should confirm the figures: our calculator gives an estimate (it assumes a single drawdown, one upfront fee and constant monthly charges), but the official TAEG may include other charges, such as stamp duty or insurance premiums that vary over time.