CAT Explained: Understanding Mexico's Annual Cost Rate

CAT (Costo Anual Total) is Mexico's legally mandated indicator of the total annualized cost of consumer credit, defined by Banco de México and enforced through CONDUSEF. Every regulated lender — banks, SOFOMs, and fintech micro-lenders alike — must disclose it so consumers can compare products on a common scale, similar in purpose to APR in the US or TAE in Spain.

The standard Banxico methodology for short-term micro-lending is to annualize the declared daily rate by multiplying it by 365. Because Mexican fintech microloans are typically priced on a daily basis for very short terms (often 7 to 30 days), this multiplication produces annualized CAT figures in the hundreds of percent — our market analysis found a reference CAT around 365% is common across active Mexican fintech lenders using this exact methodology.

This number can look alarming out of context, but it reflects the mathematics of annualizing a short-duration daily rate, not necessarily an unusually expensive loan in absolute peso terms. The more useful comparison for an actual borrowing decision is the total pesos repayable for the specific amount and number of days needed, which is what a good loan calculator should surface alongside the CAT.

CONDUSEF publishes a public comparator (the "Buró de Entidades Financieras" and CAT comparison tools) precisely because CAT alone can be misread. Consumers are entitled to see the CAT disclosed clearly before signing any credit agreement in Mexico, and a lender that hides or obscures this figure is very likely in violation of Mexican consumer-protection rules.

When comparing Mexican fintech lenders, look at CAT as a standardized yardstick for cost between similar-duration products, and always cross-check it against the total peso repayment amount for your actual loan size and term before deciding.