The TIN, also known as the Nominal Interest Rate, is the rate that banks use and that they communicate to us in loans, Mortgages, loans and deposit contracts, reflecting the payment of interest. A definition of TIN is the fixed percentage that is agreed as a payment concept for the amount of money borrowed. Shows the percentage obtained by the financial institution for the transfer of capital.
The Nominal Interest Rate does not take into consideration any type of expense related to the operation. It only refers to the interest agreed with the bank for the operation.
Unlike the TAE, the TIN can be daily, weekly, monthly or quarterly, although the most common is that it is monthly. The TINs of the different loans are not comparable, since they do not include the different expenses of the operation.
¿Cómo calcular TIN?
When there is an annual interest rate for a transaction, it will only be necessary to divide by the number of sub-periods to find out what the interest will be charged in the different periods. To perform the calculation you must know the TIN formula. Thus, to calculate the total capital resulting from an operation carried out with a nominal interest rate, the following formula is used:
Cn = C0 (1 + n.i)
Cn: capital at time n.
C0: capital at time 0.
n: number of years.
If you wish, to calculate the TIN You can use an online tool in which in a few steps you will know what the TIN to assume will be.
Difference between TIN and APR
To calculate the APR, a formula is used that takes into account the nominal interest rate of the operation, the bank commissions for amortization or cancellation, the frequency of payments and the expenses of the operation.
Banking legislation obliges banking entities to inform users and display the APR in different places, such as the advertising of products, in contracts and in the information provided before contracting.