Price Table vs SAC: Which to Choose for Your Loan

How a loan installment is built

Every loan payment, whatever the system, is the sum of two pieces: amortization (the part that actually pays down what you owe) and interest (the rent on the money still in your hands). The interest math is identical every month: outstanding balance times the period rate. If you owe R$ 200,000 and the rate is 0.9% per month, the first month's interest is R$ 1,800.00 — in any system.

What changes between the Price table and SAC is how those two pieces split over time. In both, interest falls month after month, because the balance shrinks. The difference is in the amortization: it grows in Price and stays flat in SAC. That single choice decides whether your installment is fixed or shrinks, and how much total interest you pay.

Price table: fixed installments from start to finish

The Price table (the French amortization system) gives you the same installment from the first month to the last. The formula for that fixed amount is:

PMT = P × i × (1 + i)n ÷ [ (1 + i)n − 1 ]

Where P is the financed amount, i the rate per period and n the number of installments. With P = R$ 200,000, i = 0.9% per month and n = 120 months, the fixed payment lands at R$ 2,732.41.

Because the payment is constant while interest falls, amortization has to grow to fill the gap. In month 1, of the R$ 2,732.41 you pay R$ 1,800.00 in interest and chip only R$ 932.41 off the balance. By month 120 it flips: almost everything is amortization and just R$ 24.37 is interest. The practical result is that, in the first half of the loan, you are paying a lot of interest and barely denting the balance — which is why paying off a Price loan early in the first years frees up little principal.

SAC: constant amortization, shrinking installment

SAC (Constant Amortization System) does the opposite: it fixes the amortization and lets the installment move. The amortization is simply the financed amount divided by the number of months. In our example: R$ 200,000 ÷ 120 = R$ 1,666.67 every single month, start to finish.

On top of that fixed amortization sits the interest on the balance, which drops every month. The first installment is R$ 1,666.67 + R$ 1,800.00 = R$ 3,466.67. Each month the payment falls by about R$ 15 (the interest on one amortization slice at 0.9%), and the last one drops to R$ 1,681.67. It is a staircase that only goes down.

The point that trips people up: SAC's first installment is much higher than Price's (R$ 3,466.67 against R$ 2,732.41, a R$ 734 gap right off the bat). That demands more income at approval, since the lender measures affordability against the largest payment. In exchange, around installment 50 the SAC payment drops below the Price one and keeps falling to the end.

Comparing the total cost of both systems

Same debt, same rate, same term. Here is how each system behaves:

SAC saves R$ 18,988.81 in interest — almost 15% less. The reason is pure arithmetic: because the constant amortization knocks the balance down faster in the early years, there is less balance left to charge interest on. No magic, no different rate; just the effect of paying off principal sooner.

The trade-off is cash flow. SAC asks for a bigger effort up front, exactly when many borrowers have just taken on other costs (moving, renovations, transfer tax, deed). Price fits a tighter starting budget, at the cost of more interest over the life of the loan.

The role of the APR and the interest rate

The headline interest rate (0.9% per month in our example, equivalent to 11.35% per year) is only part of the story. The number that actually matters when comparing offers is the total annual cost — in Brazil the CET (Custo Efetivo Total), an APR-style figure the lender is required by central-bank rules to disclose before you sign. It folds in, beyond interest, everything that makes the loan more expensive:

• property appraisal and contract issuance/registration fees;
• financial transaction tax (on non-housing credit);
• mandatory insurance (life/disability and property-damage cover);
• any monthly administrative charges.

That is why the APR is always higher than the advertised interest rate — sometimes by several points. Comparing two loans by interest rate alone is like picking a flight on base fare while ignoring bags and taxes: the final price can flip the ranking. Always ask for the annual APR of both offers and compare them to each other, not one's rate against the other's APR.

Simulating before you sign

Abstract numbers decide nothing; what decides is seeing your installment with your amount and your term. Before closing, run your case through a Financing Simulator, toggling between Price and SAC to see each scenario's first installment, last installment and total interest. For a personal or auto loan, the Loan Calculator and the Loan Simulator show the same shape over shorter terms.

It is also worth testing extra payments. Whenever spare money shows up (a bonus, a tax refund), you can knock down part of the balance and choose between shortening the term (less total interest) or lowering the installment (easier monthly budget). To see how much sooner the debt ends, the Time to Pay Off Loan Calculator turns the effect into months saved.

Frequently asked questions

Is SAC always better than Price?

On total interest, yes: by paying off principal faster, SAC almost always costs less in the end. But "better" depends on your wallet today. If SAC's first installment doesn't fit your budget or won't clear the lender's affordability check, Price is the workable option — and a debt you can actually pay beats savings you can't reach.

Can I switch systems after signing?

As a rule, no. The amortization system is fixed in the contract and runs to the end. That is why the Price-versus-SAC choice has to be made at the simulation stage, before signing. What you can do afterward is make extra payments to shorten the term or reduce the installment.

Why do Brazilian banks use SAC for most home loans?

Long housing loans (20 or 30 years) pile up a lot of interest, and SAC trims that total by knocking the balance down earlier — which also lowers the lender's risk. Price shows up more on short terms, like auto and personal loans, where a fixed installment makes budgeting easier.

Is there a system with a rising installment?

Yes. SACRE and variants indexed to a reference rate or to inflation can make the installment climb over time. They are less common today, but they reinforce the rule: read which system and which index your contract uses, because together they decide whether your payment is fixed, falling or adjusted.