How much does a loan really cost in Paraguay? How to calculate the total cost and the effective rate

A loan costs what you pay in total minus what you receive. If they lend you ₲10,000,000 and you repay 24 payments of ₲530,000, you pay ₲12,720,000: the loan costs you ₲2,720,000. That number, not the size of the payment, is what you should compare before you sign.

In this guide you learn to do that calculation in 30 seconds, turn it into an effective annual rate and compare it with the maximum interest the Central Bank of Paraguay (BCP) publishes each month: 27.26% in October 2026 for loans in guaraníes.

The simplest calculation: payment × number of payments − what you received

The formula doesn't need a calculator:

Loan cost = (payment × number of payments) − amount you received

Take a ₲10,000,000 loan over 24 months. See how the cost changes depending on the payment they offer you:

Look at what happens between the last two rows: ₲90,000 more per month in payment seems like little, but it takes the rate from 27% to 50%. The payment alone doesn't tell you whether the loan is expensive; the rate does.

Why the payment alone isn't enough

Nominal rate and effective rate: the difference

• Nominal rate: the one usually advertised. It's obtained by multiplying the monthly interest by 12.
• Effective annual rate: includes the effect of charging interest every month on the balance. It is always equal to or higher than the nominal rate.

With the ₲620,000 payment from the table, monthly interest is 3.458%. The nominal annual rate comes to 41.5% (3.458 × 12), but the effective rate is 50.4%. To compare offers, always use the effective rate: it's the one the BCP uses to set the maximum allowed.

How to get the rate from the payment

In a fixed-payment loan, the payment is calculated like this:

payment = amount × i / (1 − (1 + i)^(−n))

where i is the monthly rate and n the number of payments. The i can't be solved by hand: you try values until the payment matches (that's what our calculator does). Then:

Effective annual rate = (1 + i)^12 − 1

For the ₲620,000 payment: (1.03458)^12 − 1 = 50.4%.

A clarification: the BCP calculates the rate using the actual days of each payment (what it calls daily IRR). A calculator that uses equal months gives a very close approximation, but not an identical one.

The BCP cap: what the maximum is in October 2026

Every month the BCP publishes the maximum interest that banks and finance companies can charge. There is one for loans in guaraníes and another for foreign currency, for all terms. The BCP publishes it under the title "maximum effective lending rates".

How it's defined:

• Loans: Law 2339/2003 considers rates usurious when they exceed the average effective annual rates on consumer credit by 30% (according to the BCP, calculated with a 24-month moving average).
• Credit cards: Law 5476/2015 (art. 9) says the interest cannot exceed three times the average deposit rates.

The values change every month. Check the current one on the BCP's usury limits page.

What counts toward the rate and what doesn't?

According to a 2023 circular from the Superintendency of Banks with calculation examples:

• Taxes you're charged are not considered interest.
• Administrative costs are left out of the rate only if the transaction doesn't exceed 25 minimum wages and the cost doesn't exceed 5 minimum daily wages. If those limits are exceeded, the excess is part of the rate.

That's why a high payment doesn't prove by itself that the maximum was exceeded: there may be insurance, fees and costs inside. What it does prove is that you need to ask for the breakdown in writing.

What to ask for in writing before you sign

Take this list with you when you ask for a loan:

• The amount you will actually receive, after fees are deducted if there are any.
• The number of payments and the amount of each.
• The nominal rate and the effective annual rate.
• How much is interest, fees, insurance and costs, separately.
• The taxes that get added.
• What happens if you're late: late-payment and penalty interest.
• Whether you can pay off early and how interest not yet accrued is calculated.
• A copy of the contract to take home and read calmly.

With that data you do the math: payment × number of payments − amount received, and then the rate.

How to compare two offers: the lowest payment can cost more

Imagine two institutions offer you ₲10,000,000:

Offer B has a payment that's ₲120,000 lower, and that's why it "fits the budget better". But it costs you ₲1,920,000 more and has a higher rate. If A's payment fits your budget, A is the better offer.

Fixed payment: how much of each payment is interest

In a fixed-payment loan, interest is calculated on the balance you owe. At a rate of 27.26% a year (2.03% a month) and a payment of ₲530,459:

• First month: ₲202,916 is interest and ₲327,543 is principal.
• Last month: almost the whole payment is principal.

That's why, if you pay off early, you avoid precisely the interest for the months that were left. That said: ask whether the contract charges a fee for paying off early.

Four common traps

1. Stretching the term to lower the payment. That's offer B above.
2. Only looking at whether the payment "fits". Fitting your budget doesn't mean it's cheap.
3. Paying off one loan with another without looking at the total cost. Each refinancing can add new fees and costs.
4. Accepting an interest rate far above the published maximum. It's a warning sign: ask for the breakdown in writing before you sign.

Calculate your loan in 30 seconds

Enter the amount you receive, the number of payments and the amount of each payment. The calculator tells you how much you pay in total, the monthly rate and the approximate effective annual rate and, if you choose guaraníes, whether it exceeds the BCP maximum.