uvc

THIS IS HOW INDEXED CREDITS (UVC) WORK

An indexed credit in Unidades de Valor Crédito (UVC) is adjusted according to the official exchange rate. Even though you pay in bolívares, your debt will keep its equivalent in foreign currency.

📊 PRACTICAL EXAMPLE: A $1,200 CREDIT

Imagine you receive a loan equivalent to $1,200 over 12 months with an annual interest rate of 16% and an initial commission of 0.80% ($9.60).
You will have 12 fixed monthly installments in dollars of approximately $108.88, payable in bolívares at the official rate of the day.

At the end of the year, you will have paid:
✔️ 💵 Principal: $1,200.00
✔️ 📈 Interest: $106.52
✔️ 🏦 Initial commission: $9.60
✔️ 💳 Total disbursed: $1,316.12
(Total financing cost: $116.12)

HOW DO REAL INTERESTS WORK?

✔️ You don’t pay the full 16% on $1,200: Interest is calculated month by month on the outstanding balance. As each month you pay down principal, the amount on which interest is applied decreases:

✔️ Installment 1: You pay $16.00 in interest.
✔️ Installment 12: You pay only $1.43 in interest.

The real cost isn’t just a simple subtraction: Even though you paid an additional $116.12, you didn’t keep the full $1,200 for the entire year (you were repaying money from the first month). Your effective real financing cost is higher than the nominal percentage, so you must assess whether your return exceeds that margin.

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