Is my rate high?

What the page does

When a lender quotes a rate, the natural question is whether it is a lot or a little. The page answers it by placing your rate among the rates that institutions reported for the same kind of credit. In Brazil, the central bank publishes, for each kind of credit, the average effective cost each institution charged in operations already made. The page lines those figures up and shows where yours falls: what share of the institutions reported a lower rate, which is the median, which range holds the middle half of them, and how far the extremes are. It describes a position. It does not say that a rate is good or bad, and it does not recommend an institution.

What you enter

• The country and the kind of credit. Personal loan, payroll loan, vehicle financing, housing finance, credit card and overdraft are among them. The credit card's revolving balance and the overdraft are not paid in installments, so the Simulation does not offer them, but they can be compared here.
• Your rate, with everything counted. It has to be an effective rate, a month or a year, that includes tax, fees and insurance. The published figure is the average effective cost, charges included, so a nominal rate, which leaves them out, would look lower than it is. If you only know the amount released and the installment, the contract check finds the real rate for you.

How the position is worked out

The page puts the rates in order, from the lowest to the highest. The median is the one in the middle: half of the institutions reported less, half reported more. The middle half goes from the lower quartile, the value a quarter of the way up the list, to the upper quartile, three quarters of the way up; when no value falls exactly there, the page interpolates between the two neighbours. Your position is the share of institutions that reported a lower rate than yours, and the share that reported a higher one. Every institution counts once, whatever the amount it lent. To give a position the page needs at least five institutions; with three or four it shows only the median and the range, and with fewer than three it shows nothing, because a handful of numbers does not describe a distribution. When the previous period is on record, the page also says what the median was then, with the date it ended and how many institutions reported, next to the current one. The record only starts when the service began keeping it, so it can be missing.

A worked example

The list below is made up, to show the arithmetic; it is not the rates of any institution. Suppose nine institutions reported, for a personal loan, monthly rates of 1.90%, 2.30%, 2.60%, 2.90%, 3.10%, 3.40%, 3.80%, 4.50% and 6.20%.

A contract with a real rate of 3.37% a month has five institutions below it (1.90%, 2.30%, 2.60%, 2.90% and 3.10%) and four above (3.40%, 3.80%, 4.50% and 6.20%). It is higher than the rate reported by 56% of the 9 institutions and lower than the rate reported by 44%. It sits inside the middle half, a little above the median. A rate of 7.10% would be above every institution on the list, and 1.50% below all of them; the page says so in those words, without a percentage.

What the reference is, and what it is not

Each figure is one institution's average effective cost, with tax and operating charges included, over operations already contracted. It is not an offer. It differs from customer to customer of the same institution, because the rate depends on the risk of whoever borrows, and it describes the past period it covers, not the rate you would get today. The median and the quartiles are calculated by Finasst from those figures; they are not numbers the central bank publishes, and they are not the system average, which would need the amount each institution lent.

For the United States and Spain the page has a single average for the whole country, published by the Federal Reserve and by the European Central Bank. There is no list of institutions behind it, so there is no position to give: the page compares your rate with the average and says on what basis each one is published, because the two are not built the same way.

Mistakes to avoid

• Typing the nominal rate of the proposal. Use the effective rate with the costs counted.
• Mixing months and years. The page converts an annual rate to a monthly one, but the field has to match the basis chosen.
• Treating the average as the rate you should get. Two people at the same institution can be offered very different rates.
• Reading a position as advice. Being above the median can be fully justified by the risk, the guarantee or the term.

What the page does not cover

It does not list institutions, rank them or say which one to choose. It does not compare the term, the guarantee or the services that come with a contract. It keeps no long history of the rates, only the period before the current one, so it cannot draw a trend. Kinds of credit with few institutions, such as housing finance, get only a median and a range, or nothing at all when fewer than three reported, and kinds with no recent rates are left off the list.

Where to go next

The guide on what the central bank's average rate is and is not explains the source in more detail, and the glossary defines the terms used here. To find the real rate of a contract, use the contract check; to see what a loan costs before taking it, use the simulation; and the methodology page describes how the calculations are done.