What is the Annual Percentage Rate of Charge (APR)?

Verified 05 September 2023 - Directorate for Legal and Administrative Information (Prime Minister)

The annual percentage rate of charge (APR) is the all-inclusive rate of a credit.

It shall include in particular the rate used to calculate the interest on the loan (nominal rate), and the costs relating to the elements which constitute a condition for obtaining the credit, or for obtaining it according to the criteria used in the tender:

  • File Fees
  • Fees paid or due to intermediaries involved in granting the loan (broker)
  • Compulsory insurance and compulsory guarantees.

There may be some differences between the cost of a consumer credit and the cost of a mortgage.

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Consumer credit

  • Bank interest calculated on actuarial rate
  • File fees (paid to the bank)
  • Fees paid or due to intermediaries (e.g. broker)
  • Cost of compulsory insurance (bank or other company insurance)
  • All other fees charged to you for obtaining the credit (account keeping fees, in case of an obligation to open an account in the bank granting the loan)

Mortgage

  • Bank interest calculated on actuarial rate
  • File fees (paid to the bank)
  • Fees paid or due to intermediaries involved in the granting of the loan (e.g. broker)
  • Cost of Borrower Insurance
  • Guarantee fees (mortgage or surety)
  • Real estate valuation fees (paid to a real estate agent)
  • All other fees charged to you for obtaining the credit (account keeping fees, in case of an obligation to open an account in the bank granting the loan)

FYI  

for a loan that finances the purchase of a home in the future state of completion (Vefa), the intercalary interest shall not be taken into account in the calculation of the APR.

The APR is expressed as an annual percentage of the amount borrowed.

It allows you to compare multiple loan offers based on their “all inclusive” cost.

You can estimate the APR using a simulator:

Do a simulation of the schedule and APR of a mortgage

Credit institutions shall be obliged to indicate the APR in advertisements, pre-offers of credit and in loan agreements.

If the APR is not mentioned in the contract or if an incorrect APR is mentioned, the court may cancel the interest in whole or in part.

In determining the amount of interest canceled, the judge shall take into account, inter alia, the damage suffered by the borrower.

The APR may not be higher than the applicable rate of wear and tear, i.e. the maximum rate of interest legally applicable in France.

There are different wear rate depending on your situation: amount borrowed, duration and type of loan, for example.

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