What is Amortização?
Amortização is the act of paying the principal value of a debt gradually. Each installment you pay has two parts: the amortization (which reduces the outstanding balance) and the interest (which is the cost of the loan).
Types of amortização
Tabela SAC (Sistema de Amortização Constante)
- Amortization is fixed in all installments
- Installments start larger and decrease
- You pay less interest in total
Tabela Price
- Installments are fixed from start to finish
- At the beginning, the largest part of the installment is interest
- You pay more interest in total than with SAC
Practical example
Financing of R$ 100,000 in 30 years at 10% per year:
- SAC: first installment ~R$ 1,111, last ~R$ 282. Total paid: ~R$ 250,000
- Price: all installments ~R$ 877. Total paid: ~R$ 316,000
Amortização extraordinária
You can make extra payments to reduce the outstanding balance faster. This saves thousands in interest. Whenever you have extra money, consider amortizing your debts.