What is the rate of wear?
Definition of wear rate
The wear threshold corresponds to the maximum overall effective annual rate (TAEG) beyond which a bank cannot lend money. This threshold has been fixed to prevent too high interest rates to place the borrower in a difficult financial situation. The rate of wear therefore has a regulatory function.
Definition of the overall effective annual rate
The overall effective annual rate (TAEG) takes into account all the costs incurred by the subscription of a loan:
- case fees,
- brokerage,
- insurance, etc.
It makes it possible to compare the overall cost of different proposals. This TAEG is expressed as an annual percentage of the amount borrowed. There are different rates of wear depending on the loan categories (consumer credit, real estate loans, discovered in account, renewable credit, etc.), the amount of the loan and its duration.
What regulations supervise the wear rate?
According to the Consumer Code (article L314-6), is renowned usuriously conventional loan granted to an overall effective rate exceeding more than third party (33 %) the average effective rate performed during the previous quarter by credit institutions for operations of the same type.
Bonus loans, administered or regulated by the state, are not taken into account in the calculation of this arithmetic average. In the event of excessive perceptions, the sums unduly deducted must be returned to the borrower (including interests).
Note: All ready is considered usurious when its TAEG (annual overall effective rate) is higher than the rate of wear. Wear is a criminal offense liable to two years’ imprisonment and/or fine of 300,000 euros (Article L341-50 of the Consumer Code).
Who fixes the wear rate?
The Banque de France sets the wear rate
To calculate the threshold of wear, the Banque de France collects with a representative sample of credit institutions and financing companies The TAEGs practiced for the different categories of loans.
These rates, increased by a third party, establish the wear thresholds corresponding to each credit family, which is addressed to individuals, associations, professionals or businesses.
In detail, we find them:
- Classic real estate credits with fixed or variable rate and relay loans,
- consumer credits,
- personal loans,
- Auto credits,
- work credits,
- Discoveries banking.
Calculation of the rate for consumer credits
Two criteria, other than the rate, come into account in the calculation of the wear rate: the duration of the credit for real estate loans and the amount of the loan subscribed for consumer loans.
Since the promulgation of the Lagarde law of July 1, 2010, consumer credits have been split into 3 categories, determined from the amount borrowed:
- less than or equal to 3,000 euros,
- greater than 3,000 euros and less than or equal to 6,000 euros,
- greater than 6,000 euros
Each category is wearing a specific wear rate.
Calculation of the rate for real estate loans
Regarding real estate loans, the threshold for wear of fixed rate credits is determined according to three maturity:
- under 10,
- from 10 years to less than 20 years old,
- 20 years and over
Variable rate loans and relay loans have their own wear rate. These two categories do not take into account the duration of loans.
Note : From February 1 to July 1, 2023, the wear rate was updated every month, and no longer every quarter. This temporary monthly monthly payment made it possible to “smooth over time the evolution of wear rates, so that they provide their protective function by corresponding to the state of the market”, according to Bercy Info.
What is the current wear rate in 2025?
The third quarter of 2025 wear rates reflect an overall drop in the continuity of trends observed since the start of the year. Of 1ᵉʳ July to September 1, 2025the wear rate of the main lending categories for individuals is as follows.
Wear rate for consumer loans
- 23.39% for loans of an amount less than or equal to 3,000 euros;
- 15.79% For loans of an amount greater than 3,000 euros and less than or equal to 6,000 euros;
- 8.69% For loans over 6,000 euros.
Wear rate for real estate credits
- 4.32% for the fixed rate of a loan lasting less than 10 years;
- 5.03% for the fixed rate of a loan lasting between 10 years and less than 20 years;
- 5.08% for the fixed rate of a loan lasting 20 years and more;
- 5.37% for variable rate loans;
- 6.31% For relay loans.
Evolution of the wear rate from 2023 to 2025
Here is the evolution of the wear rate for real estate credits from 2023 to 2025.
Why is the wear rate sometimes a problem?
During the rapid increase in rates, the wear rate does not adjust quickly. And this, because it is calculated on the basis of the average rate observed in the last three months.
This leads to difficulties in the most vulnerable borrowers, such as first-time buyers or people over 45, who do not always benefit from the best rates offered by banks.
These borrowers then encounter obstacles to validate their loan requests.
