Debt Snowball Calculator

How debt amortization works

Brazilian lending leans on two amortization systems. With the Price system (you'll also see it called French amortization) the installment never changes: PMT = PV · i / (1 − (1 + i)^(−n)), where PV is the present value (the financed amount), i is the rate per period and n is how many installments there are. The SAC system (Sistema de Amortização Constante) takes the opposite tack and holds the principal portion steady: Amort = PV / n. Each month's interest is the outstanding balance times i, so the installments shrink as you go.

Put some numbers on it. R$ 50,000 financed at 1% per month over 60 months under Price gives a fixed installment of roughly R$ 1,111. Twelve payments in, the balance still sits around R$ 43,000, because those early installments are mostly interest with very little principal. Read across any line of an amortization table and you get the same five columns: opening balance, interest charged, principal amortized, installment paid, closing balance. Throw in an extra payment and you can either keep the installment and cut the term short, or keep the term and shrink the installment. BCB Resolution 4.292/2013 guarantees a pro-rata interest discount when you settle early.

Real-world applications

You'll find amortization tables behind mortgage financing (most Brazilian housing loans pick SAC, since the falling installments hold up well against inflation), payroll-deductible loans (consignado), CDC vehicle financing and refinancing. Revolving credit card debt is the odd one out. Brazilian rotativo CET routinely blows past 400% per year, and nothing is really being amortized there; the interest just stacks. The defensive move is plain enough: never roll a credit card balance, and if you already have, refinance that rotativo into a parcelado or a personal loan right away.

FAQ

Price or SAC — which pays less interest? SAC wins on total interest because the balance comes down faster, though you pay for that with higher installments at the start. Price keeps the cost flat across the schedule, which is gentler on your cash flow in the first year.

What is CET and why does it matter more than the rate? CET (Custo Efetivo Total) rolls the rate, IOF, registration fees and insurance into one annualized percentage. Two loans can carry the same nominal rate and still land at very different CETs, so compare the CET rather than the headline rate.

Is it worth making extra payments? Almost always, and the earlier the better, since that's when interest eats the biggest slice of each installment. Point the extra money at the principal (amortização) and tell the bank whether you'd rather shorten the term or lower the installment.