According to regulation No. 04/19/CEMAC/UMAC/CM on the effective global rate and the repression of usury and the publication of banking conditions in the CEMAC, the overall effective rate of credit is the annual rate which measures the real cost of the credit borne by the borrower. It is expressed as a percentage to two decimal places.
The annual percentage rate of charge shall include the following elements, determined inclusive of all taxes;
- The interest calculated on the basis of the nominal contractual rate,
- The file fees,
- The insurance premiums, linked to the setting up of the credit,
- Where applicable, the cost of registering the credit agreement,
- Where applicable, the costs of providing the security required by the reporting institution,
- Remuneration and fees paid or due to banking intermediaries involved in the credit granting process, including when they correspond to actual disbursements,
- Commissions or any other remuneration linked to the granting of credit.
The following shall not be taken into account in determining the overall effective rate of credit:
- fees and penalties payable by the borrower for failure to perform its obligations under the credit agreement,
- The costs of transferring funds as well as costs relating to the maintenance of an account intended to receive withdrawals made for the repayment of the principal of the loan, the payment of interest and other charges.
The overall effective rate shall be determined for each loan prior to the conclusion of the relevant agreement, on the assumption that the agreement will remain in force for the contractual period fixed and that the lender and the borrower will perform their respective obligations within the agreed time limits and dates.
In the case of a variable nominal rate or where the credit agreement contains clauses for the revision of the nominal rate, commissions or charges included in the determination of the overall effective rate, the latter shall be calculated at the time of the conclusion of the contract on the assumption that the nominal rate, commissions and charges remain fixed until the end of the contract. However, the overall effective rate shall be recalculated each time the credit agreement is amended in accordance with the contractual provisions.
The methods of calculating the overall effective rate by type of credit are specified by instruction of the Central Bank.