If you ship consumer credit in Mexico, one number follows your product everywhere: the CAT — the Costo Anual Total, the official annual cost of the credit. It appears in disclosures and advertising, it is the figure supervision looks at, and in most lending companies it is computed far too late to be useful.
What the CAT measures
The interest rate tells a borrower what the interest costs. The CAT tells them what the credit costs: interest, fees, and the rest of what the borrower pays, folded into one annualized percentage. It is not a number you design; it is computed by the method of CONDUSEF, the financial-consumer regulator, and your figure has to agree with it. Two lenders computing the CAT for the same product must reach the same number — that is the point of an official method.
The gap between the rate and the CAT is wider than intuition suggests. Take a plausible product: a 68.00% annual rate, an origination fee of 250 basis points, IVA at 16.00%. On MXN 12,000 over 12 months, the headline rate says 68 — and the CAT comes out at 89.4%. Nothing exotic happened. A fee collected up front and a tax on every installment simply cost more, annualized, than the rate admits.
Product Personal 12 · v12 · signed Rate 68.00% fixed Origination 250 bp IVA 16.00% Sample MXN 12,000 · 12 months Installment 1,404.90 / month CAT 89.4% · CONDUSEF method Cap check within the legal cap
One product, many CATs
Here is the part that trips up product teams: a product does not have a CAT. It has a CAT for every combination of amount and term it allows. A definition that permits MXN 5,000 to 60,000 over 6 to 24 months is not one loan — it is a surface of loans, and the cost varies across it. Fixed and up-front charges weigh heaviest on the smallest, shortest loans, so the point where the CAT peaks is usually the minimum amount at the shortest term — exactly the corner nobody prices by hand.
So the compliance question is never “what is the CAT?” It is “does any allowed corner of this product break the cap?” — and answering it means recomputing the surface every time a term changes.
Definition time versus audit time
In most lending stacks, the CAT is computed downstream of the decision that determined it. The product is designed in a spreadsheet, approved in a meeting, configured into the loan system — and the CAT is produced later, when a disclosure is generated or an auditor asks. By then the product has shipped. If the smallest allowed loan breaches the cap, you learn it as a finding, months after the meeting where a different fee would have been a one-line change.
Workspace inverts the order. The CAT is computed at definition time, by the market’s method, while the person who can still change the terms is looking at them. Enter a product and the simulation returns the repayment schedule, the CAT under CONDUSEF’s method, the check against the legal rate cap, and a coherence check for products that cannot survive their own boundaries — an origination fee, say, so high that the smallest allowed loan cannot cover its own first installment. A failed check is a mark on a draft, not a paragraph in an audit report.
The same number, every time it is asked for
Computing early only helps if the early number is the final number. That is why the CAT sits on the same machinery as everything else in the engine: exact arithmetic in integer minor units and basis points, over versioned inputs. The CAT is a function of two things — the product version and the market’s rule version — and both are immutable once signed. The figure the manager saw at definition, the figure on the disclosure, and the figure the auditor recomputes are the same computation over the same frozen inputs.
It also makes regulatory change an event you absorb once. When the method’s parameters or the tax rate move, that is one new signed market version with an effective date — and every product that points at the market recalculates against it. Which products now break the cap is a question the catalog answers the same afternoon, not a quarter-long project.
The CAT is not paperwork attached to a product. It is a property of the product, as real as its rate or its term range — and properties should be computed when the product is defined, by the people who can still change it.