When evaluating the convenience of a personal loan, one of the key aspects to be taken into consideration is the amount of interest . The greater the percentage expressed by the interest, the greater will be the additional amount that must be returned during the repayment of the loan.
Loans at low rates: pay attention to TAN and TAEG
Usually the interests related to a personal loan are expressed through two different percentage parameters, the TAN and the APR . Let’s find out what are the differences between the two to really understand what are the loans with the lowest interests.
The nominal annual rate TAN
When a personal loan refers to the TAN, we are talking about a nominal annual rate . This is the interest rate that is calculated annually on the amount paid for the personal loan. Be careful though because the TAN does not really correspond to the interest rate that will be calculated on the loan, as it does not include any costs other than the pure interest amount.
What is TAEG?
The APR, whose acronym stands for annual percentage rate, is the interest rate that most allows to understand the real cost of the personal loan that you are about to underwrite.
The indication of the APR is fundamental because it allows to understand the cost of the loan and it is the interest rate to consider in the evaluation of the most advantageous personal loans.
We have dedicated a specific guide to the calculation of interest, to which we refer to have all the details on definitions and methods for calculating interest rates.
How to find the loan with the lowest interests?
As we mentioned in the previous paragraph, to find the loan with the lowest interest, it is necessary to refer to the APR . Keep in mind that this rate of interest usually has a higher value than the TAN. The most appropriate tool to find the loan with the best rate is the comparison between as many personal loans as possible. If you have a minimum amount of time to invest in the search for the loan, it is recommended to compare among them the largest number of individuals providing personal loans. Online research is certainly the fastest way to view the largest number of loans possible. However, visiting the various banks and financial websites could be time consuming.
Very useful from this point of view is the use of an online loan comparator , which allows you to identify the personal loan with the lowest interests among the products that correspond to the needs of those who take out the loan itself.
Attention to loans dedicated to particular profiles
An aspect to be taken into account when comparing personal loans concerns the characteristics of the applicant . In fact it is quite common that personal loans targeted to specific profiles, for example, protests and bad payers, have an interest rate higher than a standard loan. However, these loans often represent the simplest solution for this type of applicants, who may find it difficult to access a personal loan not designed for a specific type of applicant.
What are subsidized loans?
A particular type of personal loans with low interest is represented by subsidized loans . This type of personal loan does not differ substantially from a traditional loan. What differentiates it however is the application of a lower interest rate , which for this reason is called subsidized, compared to that applied to a similar product. A typical case of facilitated personal loans is that reserved for students for university or school expenses in general, where the rate applied is lower because it was designed for a specific purpose. Often these types of loans are guaranteed by third-party institutions, as is the case with personal loans for unemployed , pensioners or other categories, often funded by specially created funds. Access to personal loans is governed by rules that vary depending on the loan. In this case it is therefore necessary to refer to the communications of the institution or of the bank that offers the loan itself to know in detail the specific characteristics.