What the CAT (costo anual total) is, and what it leaves out of a Mexican lender's price
Banco de México's compounded, all-in annual cost of a loan: what Circular 21/2009 counts, why VAT, late fees and default stay out, and how a fund rebuilds the advertised CAT from the loan tape.
The CAT, costo anual total, is the single annual percentage Banco de México requires Mexican lenders to quote on loans below 900,000 UDIS. It is an internal rate of return, not an interest rate: interest, required fees, insurance and cash collateral, compounded, before VAT, assuming every payment arrives on time. Unregulated SOFOMs quote it too.
The CAT is an internal rate of return that Banco de México wrote into regulation
The rule is Circular 21/2009 of Banco de México, Mexico's central bank, issued under articles 8, 21 and 22 of the Ley para la Transparencia y Ordenamiento de los Servicios Financieros and last amended in 2015. It defines the CAT as the annual cost of financing that, «para fines informativos y de comparación», for information and comparison, includes all the costs and expenses inherent to the loan.
Numeral 4.1 gives the equation. The CAT is the rate i at which every amount the borrower receives, discounted by (1 + i) raised to the time in years, equals every amount the borrower pays, discounted the same way. That is an internal rate of return, and it compounds. A loan at a nominal 46.57% a year, the balance-weighted rate on personal loans that Mexican banks and regulated SOFOMs made in January and February 2026 according to Banxico's statistics, carries a CAT of 57.9% over twelve monthly payments before any fee is added.
Fees then move it further, and the ones taken at disbursement move it most. A 3% opening fee withheld from the loan means the borrower receives 97 and repays the schedule of 100, which lifts the CAT by about ten points. A required insurance premium is counted as well, even though the lender passes it to an insurer.
Modelled. A loan of 100 repaid in 12 equal monthly payments of 10.58 at a nominal 46.57% a year (Banxico SIE CF815, personal loans made in January and February 2026). The 3% opening fee is withheld at disbursement; the insurance premium is 0.25% of the original principal a month and goes to an insurer. CAT computed with the formula in numeral 4.1 of Banxico Circular 21/2009. Effect's arithmetic, 13 October 2026.
| What is counted | Annual figure |
|---|---|
| Nominal interest rate | 46.6% |
| CAT, interest only (monthly compounding) | 57.9% |
| CAT, plus a 3% opening fee withheld at disbursement | 67.8% |
| CAT, plus required insurance | 75.9% |
| Lender's return, interest and fee, every loan pays | 67.8% |
| Lender's return, 6% of loans stop after the fourth payment | 55.7% |
| Lender's return, 10% of loans stop after the fourth payment | 47.7% |
The CAT a borrower is shown rises from 57.9% to 75.9% without the rate moving. The return the lender keeps is 67.8% only if every loan pays; if 6% of loans stop after the fourth payment and nothing is recovered, it is 55.7%. The CAT answers the first question, and only the loan tape answers the second.
The rule counts everything a borrower must pay and writes out VAT, late fees and default
Numeral 4.2 lists what goes into the payments. Principal, including any amount financed to pay fees or insurance; ordinary interest; fees for investigation, analysis, granting, opening and administration; premiums for life, disability, unemployment, damage or theft insurance the lender requires; cash collateral the borrower must post, counted in when it is posted and out when it is released; optional fees without which a preferential rate is not available; and the difference between the credit price and the cash price of a good.
The same numeral keeps three things out: notarial, registry and transfer costs that a cash buyer would also pay, value added tax on interest, fees and premiums, and the borrower's own tax deductions. Numeral 5.1 then fixes the assumptions. The client pays on time, so no prepayment charge, late fee or default enters the calculation, and a variable rate is frozen at its value on the day of the calculation for the whole term. Numeral 7 makes every published CAT a single figure, to one decimal, followed by the words «Sin IVA», without VAT.
Source: Banco de México, Circular 21/2009, numerals 4.2, 5.1 and 7, compiled text with the amendments of 2009 and 2015, read on 13 October 2026.
| What the borrower pays or risks | How the CAT treats it |
|---|---|
| Interest, and principal including any fees or insurance financed into it | In |
| Opening, analysis and administration fees | In |
| Insurance premiums the lender requires | In |
| Cash collateral the borrower must post | In when posted, out when released |
| Optional fees without which a lower rate is not offered | In |
| VAT on interest, fees and premiums | Out |
| Notarial, registry and transfer costs a cash buyer also pays | Out |
| Late fees, prepayment charges and default | Out: every payment is assumed on time |
| A variable interest rate | Frozen at its value on the day of the calculation |
Everything the borrower is contractually obliged to pay is in. Everything that depends on behaviour, a late fee, a prepayment, a default, is out by assumption. A CAT is the contract's best case, priced before tax.
of originations stand behind every advertised CAT PROMEDIO
Only loans with no arrears that were never restructured are averaged.
The advertised CAT is an average of last year's performing loans, so the tape can rebuild it
Numeral 5.2 decides the number in a lender's advertising. For a product sold for more than a year it is the weighted average of the CATs of the loans that product originated in the previous twelve months, counting only clients «sin atrasos en sus pagos», with no arrears, whose loans were never restructured, and leaving out loans to employees. The advertisement must say «CAT PROMEDIO» and name the period the offer is valid. In the product's first year the lender quotes an estimate of the terms it intends to set.
That makes the advertised CAT a statistic of the performing part of one twelve-month origination cohort, and a fund can recompute it. Take the year's originations from the loan tape, drop every loan that is late or restructured, compute each loan's CAT from its schedule and fees, and average. The circular does not name the weight for loans that are not revolving; for credit cards Banxico's own statistics weight by credit limit. A gap wider than rounding means the tape is missing loans or the fee schedule in it is not the one borrowers pay. Read by cohort, as in a static pool, the same data shows whether the CAT of new loans is drifting.
Banxico's own data shows the gap between rate and CAT on the same loan
Banxico publishes one series that pairs the two on an identical reference loan: fixed-rate mortgages in pesos from banks, Sofoles and regulated SOFOMs, priced through its mortgage simulator for a 35-year-old borrower financing 80% of the home over 15 years. Mortgages are not what most non-bank lenders sell, but they are the only product where the regulator prints rate and CAT side by side.
Fixed-rate mortgages, reference loan of 800 thousand pesos over 15 years with 20% down, borrower aged 35. Minimum and maximum rates are those of the products with the minimum and maximum CAT; averages are simple. Source: Banco de México, SIE table CF303, August 2026, read on 13 October 2026.
| August 2026 | Interest rate | CAT | Gap, points |
|---|---|---|---|
| Lowest-CAT product | 9.00% | 10.70% | 1.70 |
| Average of products | 11.31% | 13.78% | 2.47 |
| Highest-CAT product | 21.13% | 28.18% | 7.05 |
The rate explains most of a cheap loan's CAT and less of an expensive one's. Where the product is priced highest, compounding, fees and insurance add seven points that the headline rate does not show.
Every SOFOM quotes a CAT below 900,000 UDIS, and a factoring or leasing book quotes none
The circular binds banks, SOFOMs, the sociedades financieras de objeto múltiple that lend without taking deposits, both regulated and unregulated, popular and community finance companies, savings cooperatives, credit unions, trustees of trusts that lend to the public, and any company that lends to the public habitually. Numeral 3 applies it to loans below 900,000 UDIS, the inflation-indexed unit Banxico publishes daily, which is about 8 million pesos at the October 2026 value, and to mortgages of any size.
The same numeral exempts financial leasing, factoring, commercial discounting and sight letters of credit, as well as a business loan to a client who already holds a line of 900,000 UDIS or more. A fund comparing a consumer lender with a factoring lender cannot line them up by CAT: one of them has none.
Banxico consulted on a reform in 2025, and the 2015 text still governs
Banxico put a reform of the circular to public consultation from 7 November to 22 December 2025 and received five comments, according to its annual report under the transparency law. Its consultation plan lists, among other changes, that fees used in the CAT must match the fees each lender registers with Banxico and that debt crowdfunding platforms become obliged to calculate it. On 13 October 2026 the compiled text on Banxico's site still carried only the amendments of 2009 and 2015.
Questions this raises
- What is the CAT (costo anual total)?
- The CAT is the annual percentage Banco de México requires Mexican lenders to quote on loans below 900,000 UDIS and on mortgages. Defined in Circular 21/2009, it is the internal rate of return of the loan's cash flows: interest, required fees, required insurance and cash collateral, compounded, without VAT, assuming every payment is made on time.
- Is the CAT the same as the interest rate?
- No. The interest rate is one input. The CAT compounds it over the payment periods and adds every fee, required insurance premium and cash collateral the borrower must pay, so it is always at least the effective rate. On Banxico's fixed-rate mortgage panel in August 2026 the average rate was 11.31% and the average CAT 13.78%.
- Does the CAT include VAT?
- No. Circular 21/2009 excludes value added tax on interest, fees and premiums from the calculation, and every published CAT must be followed by the words Sin IVA.
- Do unregulated SOFOMs have to quote a CAT?
- Yes. Circular 21/2009 applies to regulated and unregulated SOFOMs alike, as well as banks, popular finance companies, cooperatives, credit unions, lending trusts and any company that lends to the public habitually. Leasing, factoring, commercial discounting and sight letters of credit are exempt.
- How is the advertised CAT PROMEDIO calculated?
- For a product sold for more than a year, the advertised CAT is the weighted average of the CATs of loans the product originated in the previous twelve months, counting only clients with no arrears and loans never restructured, and excluding loans to employees. It must carry the word PROMEDIO and the period the offer is valid.
Effect is not a bank, a lender, a broker-dealer, an investment adviser or a credit rating agency. Nothing here is investment, legal, accounting or tax advice. Every rule carries the version of the document it was read from, read on 13 October 2026. The worked example is modelled and describes no actual lender.
Where every figure on this page comes from8 sources
- 01Banco de México, Circular 21/2009, Disposiciones de carácter general que establecen la metodología de cálculo, fórmula, componentes y supuestos del Costo Anual Total (CAT), compiled text with Circulars 27/2009, 9/2015 and 15/2015: numerals 1, 3, 4.1, 4.2, 5.1, 5.2 and 7.
- 02Circular 21/2009 as published in the Diario Oficial de la Federación, 4 September 2009: definition, legal basis in articles 8, 21 and 22 of the Ley para la Transparencia y Ordenamiento de los Servicios Financieros, and disclosure rules.
- 03Banco de México, Circular 21/2009 page, obligated entities and list of amendments, read on 13 October 2026.
- 04Banco de México, SIE table CF303, Tasas de interés de crédito a los hogares: fixed-rate mortgage CAT and rate, June to August 2026.
- 05Banco de México, SIE table CF815, balance-weighted rates on non-revolving consumer loans: personal loans originated in January and February 2026.
- 06Banco de México, SIE series SP68257, value of the UDI, October 2026.
- 07Banco de México, consultation plan for the reform of Circular 21/2009, 7 November 2025.
- 08Banco de México, annual report on the exercise of its powers under the Ley para la Transparencia y Ordenamiento de los Servicios Financieros, data to 18 December 2025.