Auxílio Brasil loan costs up to 87% more in interest than other payroll loans

The amount paid in interest on the Auxílio Brasil payroll loan can cost up to 87% more than other types of credit with a discount on the income of public and private sector employees or INSS (National Social Security Institute) retirees and pensioners, according to simulation carried out by Anefac (association of finance executives).

Despite the cost and despite the fact that the measure was created by the government of Jair Bolsonaro (PL) during an election period, experts in the financial sector say that the modality provides the only possible credit to people who do not have access to funding for emergency expenses.

Anefac calculated how much the debtor would pay for a loan of R$ 2,582.88 to be paid off in 24 installments in the four types of payroll-deductible credit mentioned. The amount and term are the maximum allowed by the Auxílio Brasil loan rule.

For Auxílio Brasil, the monthly rate considered was 3.45% offered by Caixa Econômica Federal.

As for the interest of the other modalities, the applied rates were 1.94% (INSS), 1.96% (public servant) and 2.64% (private sector employee). These are the averages calculated based on about 40 institutions that informed the Central Bank of the values ​​they practiced in the first half of this month.

The maximum rate for the INSS payroll is 2.14% per month.

In the most disadvantageous comparison for the Auxílio Brasil loan, which is in relation to the INSS consignment, the beneficiary of the aid has an annual interest rate of 50.23%, while the retiree or pensioner pays 25.93%.

Converting this difference into reais, the total debited from the aid in two years will be R$ 3,840, of which R$ 1,257 will be for the payment of interest. This amount represents an increase of 87% in relation to the R$ 672 interest on the INSS payroll.

The Auxílio Brasil payroll loan cost values ​​were calculated based on parameters offered by Caixa on its internet pages. Sought, the bank did not confirm the calculations.

The higher cost than other types of payroll does not mean that the Auxílio Brasil loan is bad for the beneficiaries. According to experts, this loan has an important social function when used in emergency situations.

“A person can take this loan to pay off a more expensive loan or to buy a refrigerator, in case theirs is damaged. In some cases, it makes sense,” says Andrew Storfer, economics director at Anefac.

“No one denies the problem of families’ over-indebtedness in Brazil, but the offer and search for credit by people who are negative and have no access to other financing possibilities is absolutely legitimate”, says Luis Eduardo da Costa Carvalho, president of Acrefi (association of credit and investment companies).

Carvalho also emphasizes that the risk for the institution that lends the resource is not greater than that of other types of payroll loans, since the agency paying the benefit is the federal government.

The relatively low default risk, however, did not result in cheaper credit, in addition to not having aroused the interest of the financial sector in offering credit authorized by the government. Banco do Brasil, Bradesco, Itaú and Santander confirmed to Sheet that do not offer the Auxílio Brasil loan.

Storfer and Carvalho explain that the main difficulty in operating this type of credit at the moment is that the money is expensive due to the worldwide rise in interest rates to combat inflation.

Offering credit that will potentially be required by millions of people requires having a lot of cash on hand. To fill their coffers, banks vie for investors and, in times of government bonds paying high interest, institutions need to deliver high returns to attract customers.

In this context, payroll-deductible loans, which have a modest rate for the parameters of the Brazilian market, may bring little advantage in relation to the cost of raising money. In addition, you have to spend on the structure to do the business. Technology, fraud security and employees cost the industry dearly.

One way for banks to increase their profits is to take advantage of the entry of a new customer, who may have arrived at the institution to take out a payroll loan, to sell him other financial products, more advantageous for the institution.

Building this relationship between the company and the customer, however, is less promising when the borrower does so to have access to food and other basic necessities, says Storfer. “For the borrower is not so attractive.”