PRICE vs SAC Amortization: Which System to Choose for Your Financing?
When you finance a property or a vehicle, the question that few consumers ask — but which can mean tens of thousands of reais in difference — is: which amortization system will I use? In Brazil, the two most common are the PRICE Table and the SAC System. Each has a completely different structure, advantages and borrower profiles.
Understanding this difference before signing any contract can save you a significant amount over years of financing. Use our PRICE/SAC Amortization Calculator to compare the two systems in your specific scenario.
What is Amortization?
Amortization is the process of gradually paying off a debt (principal) over time, with periodic payments that cover both interest and the reduction of the outstanding balance. The way this reduction happens is what differentiates the systems.
Every financing installment is made up of two elements:
- Amortization — reduction of the outstanding balance (main capital)
- Interest — remuneration calculated on the remaining outstanding balance
The difference between PRICE and SAC is how the amortization is distributed over time.
PRICE System (Price Table or French System)
In the PRICE system:
- The installments are fixed for the entire term
- Amortization grows over time
- Interest decreases over time
The fixed installment is calculated using the formula:
PMT = PV × [i × (1 + i)^n] / [(1 + i)^n − 1]
Where:
- PMT = Fixed monthly installment
- PV = Amount financed (Principal)
- i = Monthly interest rate
- n = Number of installments
PRICE Example: Financing of $200,000 for 240 months at 0.8% per month
PMT = 200.000 × [0,008 × (1,008)^240] / [(1,008)^240 − 1]
(1,008)^240 = 6,8485
PMT = 200.000 × [0,008 × 6,8485] / [6,8485 − 1]
PMT = 200.000 × 0,054788 / 5,8485
PMT = 200.000 × 0,009368
PMT = R$ 1.873,65
You will pay $1,873.65 per month for 240 months, regardless of the period.
| Period | Installment | Interest (0.8% on balance) | Amortization | Debt Balance |
|---|---|---|---|---|
| 1 | $ 1.873,65 | $ 1,600.00 | $ 273,65 | $ 199,726.35 |
| 12 | $ 1.873,65 | $ 1,572.85 | $ 300,80 | $ 196,330.12 |
| 60 | $ 1.873,65 | $ 1,448.89 | $ 424,76 | $ 180,861.26 |
| 120 | $ 1.873,65 | $ 1,243.10 | $ 630,55 | $ 155,137.72 |
| 180 | $ 1.873,65 | $ 955.42 | $ 918,23 | $ 118,602.82 |
| 240 | $ 1.873,65 | $ 14.93 | $ 1.858,72 | $ 0.00 |
Total paid PRICE: $ 1.873,65 × 240 = $ 449,676.00
Total interest: $ 449.676,00 − $ 200,000.00 = $ 249,676.00
SAC System (Constant Amortization System)
In the Constant Amortization System (SAC):
- The amortization is always the same (constant)
- Interest decreases over time
- Instalments decrease progressively
Constant amortization is simply:
A = PV / n
And each installment is:
Instalment_k = A + Interest_k = (PV / n) + (Balance_k-1 × i)
SAC Example: Same financing — $200,000 for 240 months at 0.8% per month
Amortização constante = 200.000 / 240 = R$ 833,33/mês
| Period | Amortization | Interest (0.8% on balance) | Installment | Debt Balance |
|---|---|---|---|---|
| 1 | $ 833,33 | $ 1,600.00 | $ 2.433,33 | $ 199,166.67 |
| 12 | $ 833,33 | $ 1,520.00 | $ 2.353,33 | $ 190,000.00 |
| 60 | $ 833,33 | $ 1,200.00 | $ 2.033,33 | $ 150,000.00 |
| 120 | $ 833,33 | $ 800.00 | $ 1.633,33 | $ 100,000.00 |
| 180 | $ 833,33 | $ 400.00 | $ 1.233,33 | $ 50,000.00 |
| 240 | $ 833,33 | $ 6.67 | $ 840,00 | $ 0.00 |
Total paid SAC: Calculated as arithmetic sum = $ 833,33 × 240 + juros totais
Total de juros SAC: $ 192,800.00
Total paid SAC: $ 200.000 + $ 192,800 = $ 392,800.00
Direct Comparison: PRICE vs SAC
| Metric | PRICE | SAC |
|---|---|---|
| First installment | $ 1.873,65 | $ 2,433.33 |
| Last installment | $ 1.873,65 | $ 840.00 |
| Total interest | $ 249.676,00 | $ 192,800.00 |
| Total paid | $ 449.676,00 | $ 392,800.00 |
| Savings at SAC | — | $ 56,876.00 |
| Reduced outstanding balance | — | SAC (always smaller) |
| Debt balance risk > asset | Biggest | Minor |
Numerical conclusion: At SAC, you pay $ 56.876 a menos em juros ao longo de 20 anos — o equivalente a 6,7 meses de salário para quem ganha $ 8,500/month.
When to Choose PRICE?
- Predictable budget commitment: Fixed installment facilitates financial planning. Those who cannot tolerate monthly variation in expenses prefer PRICE.
- Lower initial income: Those who are at the beginning of their career and expect an increase in future income can opt for PRICE — the installment starts lower than SAC.
- Short-term: For short-term financing (up to 60 months), the interest difference between PRICE and SAC is small and the comfort of the fixed installment makes up for it.
- Vehicle financing: Most dealerships and finance companies use PRICE as it is the option with the lowest initial installment.
When to Choose SAC?
- Long term (over 10 years): SAC's interest savings are substantially greater over long terms.
- Ability to pay more at the beginning: Those who have a stable income or above what is necessary to cover the first installment of the SAC save much more in total.
- Housing financing (SFH): The Central Bank recommends and most banks with FGTS funding use SAC in SFH financing as it is more transparent.
- Protection against property devaluation: As the SAC amortizes faster, the outstanding balance falls more quickly — there is less risk of the outstanding balance exceeding the market value of the property.
Mixed System: SAC with Monetary Correction (TR or IPCA)
Housing financing in Brazil often uses variations of SAC:
- SAC + TR: Financing by Caixa Econômica with FGTS resources. The TR (today close to zero) corrects the outstanding balance. Low readjustment risk.
- SAC + IPCA: Caixa financing with IPCA resources. The installment may rise with inflation, which represents a risk in inflationary scenarios, but tends to have lower nominal rates.
Common Mistakes When Choosing the Amortization System
Choose PRICE just because the initial installment is smaller: Ignore that SAC charges more at the beginning, but costs less in total — especially over the long term.
Do not consider early repayment: In both systems, extraordinary repayments on the outstanding balance drastically reduce future interest. In SAC, as the balance falls faster, the benefit of extra repayments is even greater.
Accept the proposed table without simulating: Banks usually offer PRICE as standard. Always request the simulation at SAC to compare.
Ignore the CET (Total Effective Cost): The CET includes fees, mandatory insurance (MIP — death and permanent disability; DFI — physical damage to the property) and IOF that do not appear in the nominal interest rate.
Frequently Asked Questions (FAQ)
1. Which amortization system is most used in Brazil?
PRICE is historically more common in vehicle financing and personal loans. SAC is the standard system for housing financing through the SFH (Housing Financial System) of Caixa Econômica Federal. For long-term real estate financing, SAC is more financially suitable.
2. Can I change from PRICE to SAC during financing?
In general, no. The amortization system is defined in the contract and cannot be changed unilaterally. It would be necessary to transfer credit to another institution that offers the desired system, with possible transaction costs.
3. Which is more advantageous for early repayment?
Both allow early repayment. In SAC, as the outstanding balance falls more quickly from the beginning, each extra amortization has a greater impact on reducing the term or future installments. SAC is slightly more efficient for those who make regular repayments.
4. With PRICE, can I have a debt balance greater than the value of the property over time?
This risk is real in the first years of PRICE, especially in financing with high rates and monetary correction. In SAC, the outstanding balance falls linearly and steadily from the first installment, eliminating this risk more quickly.
5. Why is the first installment of SAC larger than that of PRICE?
In SAC, the constant amortization (principal) is paid in full from the first installment, and interest is calculated on the initial total outstanding balance. In PRICE, the fixed installment carries much more interest at the beginning (minimum amortization), which results in a lower first installment. Over time, SAC becomes cheaper.
6. How to calculate the exact SAC portion?
The installment of the SAC month k = (PV/n) + [PV × (1 − (k−1)/n) × i]. For example, the 61st installment of $ 200.000 por 240 meses a 0,8%: Amortização = $ 833.33; Debit balance at the beginning of month 61 = $ 200.000 × (1 − 60/240) = $ 150,000; Interest = $ 150.000 × 0,8% = $ 1,200; Installment 61 = $2,033.33.
Simulate and Compare Now
Use our PRICE and SAC Amortization Calculator to:
- Generate the complete month-by-month table of any financing
- Compare PRICE and SAC side by side
- Calculate the impact of extraordinary amortizations
- View the evolution of the outstanding balance over time
Related calculators:
- Real Estate Financing Simulator — simulate complete housing financing
- Vehicle Financing Calculator — simulate automotive financing
- Loan Calculator — simulate personal loans
- Compound Interest Calculator — understand the logic of interest