Financial System Notice
This simulator is based on the Brazilian financial system models. Interest rates, taxes (like IOF), and amortization rules may vary significantly in your country.
Auto Loan Simulator
Understanding the APR (CET)
When financing a car or motorcycle, banks often advertise an attractive interest rate (e.g., 1.2% per month). However, this is not the real rate you pay.
In Brazil, lenders must disclose the CET (similar to the APR) before you sign. It adds to the interest the IOF tax, the account setup fee, insurance and contract registration, costs that are often rolled into the amount financed. The CET is the real rate of your loan.
Worked example
A $50,000 car with $10,000 down, over 48 months, at 1.79% a month, with the Brazilian IOF tax financed and no other fees. The tax raises the amount financed to $41,254.39, the payment is $1,288.15 and the true annual cost reaches 25.93%. Including the down payment, you pay $71,831.00 for the car.
How the IOF tax works
In Brazil, individuals pay IOF on loans in two parts: 0.38% of the amount plus 0.0082% a day on each installment, counting the days until it is due, capped at 365 days. When the tax is financed, it is added to the balance and also accrues interest.
How to pay less
- Make the largest down payment you can: every dollar not financed avoids interest and tax.
- Compare the true cost (APR or CET) between lenders, not just the interest rate.
- Shorter terms mean higher payments but a lower total cost.
- Paying installments early usually reduces the interest; check your contract.
Frequently asked questions
What is the difference between the interest rate and the CET?
The interest rate only pays for the loan. The CET adds interest, taxes, fees and insurance, and shows what the credit really costs. In Brazil, lenders must disclose it before you sign.
Should I enter a monthly or an annual rate?
Either: choose the unit next to the field. The conversion is compound, so 1.79% a month is about 23.7% a year, not 21.5%.
When should I uncheck the IOF?
Uncheck it if you will pay the tax upfront or if your loan has no IOF, for example outside Brazil. The tax then leaves the payment and the CET.