Two offers can both say «12% interest» and one of them can end up costing nearly double. The CAT — Costo Anual Total — decides which is which. It takes the headline rate, adds origination fees, administration and other mandatory charges, and expresses everything as one annualised number.
Banxico publishes the formula and methodology; every regulated lender has to calculate CAT the same way so the comparison holds.
An example that makes it click
Loan A: 35% rate, 5% origination fee. Loan B: 38% rate, no fee.
On 50,000 pesos over 36 months, A's CAT lands above 44%; B's stays at 38.5%. The offer with the «lower» rate came out 6 points pricier. This happens constantly.
What the CAT doesn't tell you
CAT doesn't include optional insurance (life or unemployment) or the VAT on interest, and it's calculated on a «no late payments» scenario. Pay late and the real cost multiplies. Sign an optional insurance at the end of the application and that's outside the CAT you originally saw. Ask for it itemised in writing before you sign.
How we use it here
All comparator offers are sorted by ascending CAT. Cheapest first, no paid placement. If you want to sort by amount, term or rating, the selector is at the top right.