Personal Loan Interest

Personal loan interest: how the Price formula applies to Brazilian CDC

In Brazil, a personal loan (empréstimo pessoal) is usually a CDC (Crédito Direto ao Consumidor) aimed at individuals, with fixed instalments under the Price system. The monthly payment comes out as PMT = PV · i / (1 − (1+i)⁻ⁿ), where PV is the principal, i the monthly rate and n the term in months. Example: borrow R$ 10,000 at 5% per month over 24 months and the PMT lands at about R$ 724, with roughly R$ 17,380 paid in the end. That's R$ 7,380 in interest by itself.

Brazilian context: rates, credit score and Law 14,181/2021

Across the 2024-2026 cycle, CDC rates for individuals tend to sit in the 3% to 8% per month range; they spiked during the pandemic and have only come down part of the way since. Before approving anything, banks look at your Serasa/SPC score, your proof of income and whatever debt you already carry. The Law 14,181/2021 (Lei do Superendividamento) puts a ceiling on essential-expense commitment, so monthly debt shouldn't swallow more than 30% of net income, and courts can step in to renegotiate when someone is over-indebted. People reach for these loans to cover a financial emergency, to refinance a revolving credit card balance (>400% per year), or to make a planned purchase without falling into rotativo.

FAQ

Does the result include IOF and fees? No, it's nominal interest only. The CET (Custo Efetivo Total) is where IOF, opening fees and insurance get folded in, so when you compare offers, compare the CET.

What is a fair monthly rate? The cheapest rates banks offer (~2-3% per month) go to clients with a high score and a payroll deposit. Fintechs and credit unions are often worth a look too.

Is it worth using the loan to pay off the credit card? Almost always. Revolving card interest averages over 400% per year, whereas a personal loan rarely climbs past 100% per year.