To compare credit offers in Brazil, start with the annual Total Effective Cost (CET) reported by each lender and the accompanying CET cost breakdown. Then align the net funds you will actually receive, currency, disbursement date, payment dates and count, and other terms. Only after that should you compare CET, installment amounts, and the sum of payments. A lower stated interest rate can coexist with a higher cost when fees, taxes, insurance, or other expenses are withheld before you receive the funds.
The Brazilian term is Custo Efetivo Total (CET), translated here as Total Effective Cost. It is defined by Brazil’s rules. This guide keeps that label because definitions and disclosure methods in other countries may differ; it does not treat CET as legally interchangeable with APR or any other foreign measure.
What each figure tells you
Total Effective Cost (CET), the interest rate, and Brazilian real amounts are not substitutes for one another. Each answers a different question.
| Field | What it means | How to use it |
|---|---|---|
| Reported annual CET | Annual rate consolidating the covered dated cash flows and costs as of the calculation date | Compare equivalent offers and inspect the CET disclosure |
| Interest rate | Price of credit in the stated unit, such as % per month or % per year | Check the unit, nominal or effective basis, and matching period |
| Gross credit | Amount of the operation before any prepaid costs | Do not assume this is the cash available to you |
| Net proceeds | Funds actually delivered to you or the seller after upfront deductions | Match this amount to compare the same borrowing need |
| Installment amount | One cash outflow on a particular date in the schedule | Test affordability and check whether installments vary |
| Sum of payments | Nominal sum of the scheduled payments | See the total in reais, but do not treat it as a rate or ignore timing |
In the official text of CMN Resolution No. 4,881/2020, CET represents charges and expenses on a consolidated basis as of its calculation date and is expressed as an annual percentage with two decimal places. The stated calculation covers the credit granted and amounts charged in connection with the operation, including principal repayment, interest, fees, taxes, insurance, and other linked expenses under the agreed terms. Prepaid expenses and fees are deducted from the initial credit cash flow. The official PDF contains the same day-based formula and states that the text took effect on February 1, 2021.
The official text covers operations offered by financial institutions and financial leasing companies to individuals, individual entrepreneurs, microenterprises, and small businesses. It excludes foreign-resource pass-through operations and rural credit. This guide has the narrower scope of reading fixed-credit offers in Brazil after you receive the CET cost breakdowns. It does not assess abusive terms, rank lenders, or give personalized recommendations.
Put the offers on the same basis
A clean comparison needs equivalent conditions. If one offer provides R$20,000 and another provides R$18,500, they do not meet the same need even if both display annual rates. Ask for a revised quote or record the difference before deciding.
- Match the net proceeds, not merely the gross credit or requested amount.
- Use the same currency and compare rates in the same unit. A monthly interest rate and an annual CET are different measures and cannot be placed side by side as equivalents.
- Match the disbursement date and every repayment date. CET uses dated cash flows; moving a payment changes the comparison.
- Match the number, frequency, and pattern of payments. One payment in 365 days is not equivalent to twelve monthly installments.
- Separate financed costs from costs paid upfront or withheld at disbursement. Both can affect the offer, but they change the cash flows differently.
- Confirm whether the schedule is fixed. If an index, floating rate, or other changing reference applies, record its rule separately.
The lender must disclose CET before the credit agreement is signed and provide its CET cost breakdown. The Resolution also says this statement contains the value in reais of each receipt and payment component, its percentage of the total amount due, and the sum of installments. BCB Normative Instruction No. 83/2021 provides an example with the requested and financed amounts, monthly and annual interest rates, installment count and value, total installments, amount released, and itemized expenses.
Copyable worksheet for two offers
Copy this worksheet and replace only the information found in each lender’s CET cost breakdown. When a figure is absent, leave “not provided” and ask the lender to clarify. Do not fill gaps with estimates.
| Field | Offer A | Offer B |
|---|---|---|
| Requested amount | not provided | not provided |
| Gross credit or financed amount | not provided | not provided |
| Expenses paid or withheld upfront | not provided | not provided |
| Net proceeds | not provided | not provided |
| Reported annual CET | not provided | not provided |
| Interest rate and unit | not provided | not provided |
| Disbursement date | not provided | not provided |
| Payment dates, count, and frequency | not provided | not provided |
| Amount of each installment | not provided | not provided |
| Sum of payments | not provided | not provided |
| Financed costs | not provided | not provided |
| Variable index or reference | not provided | not provided |
After completing it, first check whether net funds, currency, dates, and schedule match. If they do not, record the difference and request equivalent offers. Among equivalent offers, CET helps compare consolidated cost; each installment shows the burden on its due date; the sum of payments shows the nominal total in reais.
365 day example: lower interest, higher cost
Consider two hypothetical fixed-credit offers in Brazil. Both release R$900.00 on October 2, 2026 and require one payment on October 2, 2027, exactly 365 days later. There is no variable index and there are no other cash flows.
| Item | Offer A | Offer B |
|---|---|---|
| Gross credit | R$1,000.00 | R$900.00 |
| Cost withheld upfront | R$100.00 | R$0.00 |
| Net proceeds | R$900.00 | R$900.00 |
| Hypothetical annual interest | 10% | 12% |
| Payment after 365 days | R$1,100.00 | R$1,008.00 |
| Illustrative annual cash-flow cost | 22.22% | 12.00% |
Because there is only one inflow and one outflow separated by exactly 365 days, the illustrative arithmetic is direct:
- Offer A: (R$1,100.00 ÷ R$900.00) - 1 = 0.2222... = 22.22%.
- Offer B: (R$1,008.00 ÷ R$900.00) - 1 = 0.12 = 12%.
This single-flow arithmetic is a simple illustration. It is not a lender’s CET calculation and does not replace the reported CET or the lender’s CET cost breakdown. Contracts with multiple installments require all cash flows and dates, as well as every component covered by the rule.
Variable indexes stay separate
Article 5 of the official text says parameters whose values change during the operation, such as floating rates or price indexes, are not included in the CET calculation and must appear in the CET cost breakdown. The CET reported on the calculation date is therefore not a forecast of those future index values. A reference can change after that date and alter payments according to the contract.
Ask the lender which index or reference applies, which part of the cost it adjusts, how often it resets, which base date is used, and whether a spread, floor, cap, or other term applies. You can also request an explanation using scenarios, while recognizing that a scenario is not a guaranteed outcome. Do not invent a future rate to complete the worksheet.
Use simulators only for illustrative amortization
The loan calculator and vehicle financing calculator help model principal, interest rate, term, and amortization from the assumptions entered. They do not produce an official CET, do not know every cost in the offer, and do not replace the lender’s CET cost breakdown. In the interest field, enter the interest rate that matches the simulator’s period; never enter CET there to try to reproduce the contract.
If the offers use SAC or Price amortization, the SAC versus Price guide helps explain how installments evolve, but the comparison still needs the offer’s CET and costs. If the earlier decision is between financing and a Brazilian consortium plan, see the financing versus consortium guide; these are different structures, and an installment simulation does not make them directly equivalent.
Before signing, inspect the CET cost breakdown line by line and use the BCB’s official page on precautions when taking out credit as an additional checklist. Keep the offer you compared and ask the lender to answer in writing for every field that remains “not provided.”