Calculate the true cost of a loan beyond the nominal interest rate.
The CET (Custo Efetivo Total, Total Effective Cost) is an annual rate that encapsulates all loan costs: nominal interest, admin fees, insurance, IOF and other charges. It is the Internal Rate of Return (IRR) of the loan's cash flow, the rate that makes the present value of all future payments equal to the net amount actually received by the borrower. Required by Banco Central Resolution CMN 3.517/2007, it is the most honest measure of a credit product's real cost. This tool solves for the CET using the Newton-Raphson method and then converts the monthly rate into an annual one by compound capitalization.
The CET is the rate that makes the present value of every installment equal the amount you actually received. The tool starts from the loan amount and subtracts the IOF and any upfront fees to reach the net amount released; it then builds the stream of effective installments, adding the monthly fee and insurance to the nominal payment. Solving that equality is the same as finding the Internal Rate of Return (IRR) of the cash flow, which is done numerically with the Newton-Raphson method.
Once the monthly CET is found, the annual figure comes from compound capitalization, (1 + CET_monthly)¹² − 1, not from multiplying by 12. The more charges beyond interest, the wider the gap between the CET and the nominal rate, which is exactly why comparing loans by their nominal rate can be misleading.
Illustrative example, a loan with a nominal rate of 2% per month, plus a monthly fee and insurance embedded in the installment: because those charges enter the cash flow, the effective installment sits above the nominal one and the monthly CET rises to around 2.5% (illustrative value). Add IOF and upfront fees, and the net amount released drops, pushing the CET even higher.
Converting that 2.5% monthly CET to a year, (1.025)¹² − 1 gives roughly 34.5% per year, well above what a quick reading of "2% per month" would suggest. It is this annual figure that lets you compare offers from different banks on equal terms.
Since Resolution CMN 3.517/2007, banks and lenders must disclose the CET before closing any consumer credit operation. When comparing offers, always look at the CET rather than only the advertised interest rate: a low nominal rate with many fees can have a higher CET than a seemingly higher rate with no charges.
This is an educational estimate. The CET computed here depends on the charges you enter; if the contract has costs you did not include, the bank's regulatory CET will differ. Always request the official CET statement before signing.
Paste the code into your HTML and the tool shows up on your page, without J-Kit's navigation and ads. It still runs in the browser of whoever visits your site.
<iframe
src="https://jkit.tools/embed/en-US/effective-annual-rate-calculator"
width="100%"
height="600"
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title="Effective Annual Rate (CET)"
></iframe>These references help contextualize formulas, standards, APIs and limitations used on this page. They do not replace professional validation when a result has legal, financial, medical or operational impact.
CET (Custo Efetivo Total) is a standardized annual rate that all Brazilian banks must disclose for credit operations, as required by CMN Resolution 3.517/2007. It exists so consumers can compare different loan offers on equal footing, since it bundles interest with every mandatory charge. If a lender does not present the CET, you can demand the statement.
⚠️ Educational simulation. The CET uses Newton-Raphson to solve for the internal rate of return of the cash flow.
Resolução CMN 3.517/2007, CET mandatory disclosure. Newton-Raphson method.
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