Guide · 8 min
What is CAT, and why is it not the same as your total repayment?
Use CAT to compare equivalent offers and the payment schedule to understand what will leave your pocket.
Short answerCAT combines interest, fees, and other costs into an annual percentage. It is useful, but can be confusing when viewed alone for very short loans.
Then follow the steps and verify every figure in the original source.
Compare like with like
Use CAT between products with the same purpose, amount, and term. A 30-day loan and a 36-month loan do not solve the same need.
Track four numbers
Write down how much you receive, every payment, each date, and the total repayment. Then use CAT to compare the annualized cost.
Include VAT and fees
Check whether an example excludes VAT and whether a fee is deducted before deposit or added to the payments.
Your individual offer controls
The average CAT in an ad does not replace the CAT and amortization table on your own disclosure sheet.