Multiple Contracts with Simple Interest: The System of Constant Amortization

Repeatedly, the Brazilian Judicial System has determined that home-financing contracts written in terms of compound interest, both in the case of constant payments and in the case of the system of constant amortization, should be substituted by contracts specifying simple interest. This has resulted, for the case of the system of constant mortization, in the adoption of a variant of a procedure that has been named the “Gauss’ Method”. It is shown that the implementation of a multiple contracts’ version may imply substantial fiscal gains, depending on the financial institution opportunity cost.

Article file ID not found.

The authors declare no conflict of interest.

Not applicable

The datasets used in this study are openly available at [repository link] and the source code is available on GitHub at [GitHub link].

This work did not receive any external funding.