What is the APR in Housing and Personal Loans?

When requesting a bank loan, the interest rate and the monthly installment are the main focuses of attention. However, there is an abbreviation that reveals the true cost of your debt.

What does the acronym MTIC mean?

The Total Amount Charged to the Consumer is, in a simple and direct way, the sum of everything you will pay to the bank until the end of your credit contract. While the monthly payment shows your immediate effort, the MTIC reveals the absolute and final cost of your debt.

This enormous number encompasses not only the amount borrowed, but also the total of the interest, the mandatory insurance premiums, the bank opening and management fees, and also the taxes associated with the operation.

The illusion of the lowest monthly payment

Many customers choose a credit proposal simply because the monthly installment presented is cheaper. However, a lower installment may hide a much longer payment term or hidden fees.

When looking at the total amount to be paid, you can quickly realize that the option with the lowest monthly payment in the short term requires the payment of thousands of additional euros in interest over the years. Cheap often turns out to be expensive when you don't look at the big picture.

How to use this indicator to compare proposals

Whenever requesting financing simulations from various banks, demand the delivery of the Standardized Information Sheet (known as FINE). In this obligatory document by law, the total amount to be paid always appears prominently.

To compare two financial proposals fairly, make sure that the loan amount and repayment term are exactly the same in both simulations. Then, just look at the bottom of the page: the proposal that shows the lowest total amount will be, mathematically, the most economical choice for your wallet.

The importance of analyzing associated insurance policies.

In the specific case of housing credit, life and multi-risk insurance have a huge impact on the overall cost. A financial institution may offer a very attractive interest rate to capture your attention, but charge insurance policies with exorbitant values that cancel out any savings.

When analyzing the total cost charged to the consumer, it is immediately perceived whether it is worth accepting the insurance proposed by the bank or if it will be much more profitable to seek alternatives in other insurers to lower the final invoice.

Want to guarantee that you choose the cheapest credit on the market?

Evaluating financial proposals requires time and financial literacy. If you want to be sure you are making the best decision, rely on the specialized help of "Poupança no Minuto." We compare the overall cost of various banks for you and take care of all the bureaucracy at no cost to your budget.