Understand what CET is: Total Effective Cost

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Are you going to take out a loan and are confused about the interest rates offered? Do you want to understand which institution ultimately offers the lowest cost, including interest and other fees? In this post, you will understand what the CET (Total Effective Cost) is and why it is important when evaluating a loan.

When looking for a loan or financing to buy a house or start a business, many people only consider the interest rate offered by the bank. There are also those who only calculate the amount of installments to be paid. However, in addition to interest, there are other costs involved, such as registration fees, IOF (Tax on Financial Transactions) or insurance. So how do you solve this?

The best way is to compare the CET, a term that you need to keep ukraine whatsapp list in mind when it comes to your financial life. The CET was created so that consumers, when taking out a loan, can easily compare the credit options available on the market.

See the example below:
You need credit and are looking for a loan from two banks. Bank A offers an interest rate of 5% per year, while Bank B offers an interest rate of 6% per year. In this case, it seems that Bank A's offer is better. However, when analyzing the proposals, you realize that Bank A's APR is 11% per year, while Bank B's is 10% per year. In other words, Bank A's proposal, which seemed better, will make you pay more in the end. And why does this happen? Because Bank A probably had other expense rates that were more expensive than Bank B, generating a higher total effective cost.

Costs vary greatly from one financial institution to another and the CET brings them all together to make life easier for the consumer. It is worth noting that they are required to inform the CET in the form of an annual percentage rate, in addition to providing a loan calculation spreadsheet.

Keep an eye out and don't sign any proposal before comparing all the rates, ok?

The content of this post includes information from episode 5 of the series “ BC explains to you ”, from the Central Bank . If you prefer to watch the content in video format, watch it below:


And in the consortium?
You may have heard that consortiums do not have interest, but rather an administration fee. And that's right! The Administration Fee is the amount paid to the administrator for the work carried out in forming, organizing and administering the consortium group. This fee is usually much lower compared to other types of credit, which reduces the CET.

Here, we always emphasize that the administration fee varies between administrators. Therefore, it is essential to do some research before choosing the one that best suits your planning. But remember: it is only a consortium if the company is authorized by the Central Bank of Brazil to operate. If you are looking for companies authorized by the Central Bank to operate, consult our list of associates.