The TRA is an acronym that means Total Repayment Amount that is charged to the consumer. It corresponds to the total amount that the consumer will pay to the credit institution during the loan period. This is the sum of all interests, loan charges including commissions, taxes and other charges such as processing commissions.
|Loan Amount:||24.000 €|
|Term:||5 years or 60 months|
|Formalization Commission||€150 + Stamp duty (4%)|
|Monthly Processing Commission||€1 + Stamp duty (4%)|
The TRA will be €31,874.10 that results from the sum of the interest (€7,655.70), the formalization commission (€156) and the processing commissions (€62.40). This means that the consumer will disburse the total of €7,874.10 costs related to the credit.
Why is TRA important?
It becomes relevant to the consumer because it allows to compare proposals independent of the loan term and interest rate. The consumer should opt for the proposal whose TRP is inferior.
The TRA should be clearly indicated in the credit proposal (standard information sheet). It should also be indicated in advertising campaigns.