French Consumer Code
In forceFor credit transactions intended to finance the needs of a professional activity or intended for legal persons governed by public law, the overall effective rate is an annual rate, proportional to the period rate, in arrears and expressed per hundred monetary units. The period rate and the duration of the period must be expressly communicated to the borrower.
The period rate is calculated actuarially on the basis of a unit period corresponding to the frequency of payments made by the borrower. Using the compound interest method, it ensures equality between, on the one hand, the sums lent and, on the other hand, all the payments due by the borrower under the loan, in capital, interest and various costs, these elements being estimated where applicable.
Where the frequency of payments is irregular, the unit period is that which corresponds to the smallest interval separating two payments. However, the smallest calculation interval may not be less than one month.
Where payments are made at a frequency other than annually, the overall effective rate is obtained by multiplying the period rate by the ratio between the length of the calendar year and that of the unit period. The ratio is calculated, where applicable, to at least one decimal place.
If the credit takes the form of an opening of drawing rights intended to finance the needs of a professional activity, the overall effective rate is calculated on the total of the rights made available to the customer.
The charges relating to any guarantees attached to the credit and the fees of legal officers are not included in the overall effective rate defined above, where their amount cannot be accurately indicated prior to the final conclusion of the contract.
Article R314-2
French Consumer CodeIn force
Updated 7 Nov 2023
