Introduction to APR Calculation and Treasury Rates Processing per French Regulation

The existing APR (Annual Percentage Rate) framework handles APR calculation for a monthly schedule and compounding frequency.

The calculation of TEG or TAEG differs based on the APR calculation formula. Also, the TEG or TAEG calculation has to handle all scenarios of the schedules like monthly, quarterly, half-yearly, yearly etc.

TEG or TAEG is the global effective annual rate, including interests and some fees and/or charges. It must be calculated for all categories of client loans or overdraft products (asset products).

The benefits of the this functionality are:

• The actual cost of funds for the customer which is inclusive of both interest expenditure and charge expenditure will be known for the customer.
• The actual cost of funds (also in business terminology known as APR) can be calculated using the below.
  • Determine the APR through TEG.
  • Determine the APR through TAEG.

Click here to understand the terms and abbreviations used in describing this module.