Lack of planning, impulse decisions, pledges that commit a significant portion of the budget, and high interest rates are some of the main factors behind misleading loan decisions. And there are misconceptions! Nearly 20.6 million Brazilians were unable to pay their bills on time between January and October 2013, according to data from Serasa Experian.
"You always have to analyze debt, think calmly before making a decision, and especially put on paper what your budget will look like from that day forward," warns Emanuella Gomes Xavier, economist and financial planner at WGFP.
Another important point is that taking credit should not become habit. It should only be considered in times of emergency or very well planned. Entering overdraft every month and always paying the minimum credit card bill, for example, are unhealthy financial practices.
• Overdraft and revolving credit are the most expensive forms of credit on the market and, if misused, can quickly turn a snowball. They were created as forms of fast consumer credit, but some people end up using it for a long time and pay a lot of interest for it ?, explains Leonardo Gomes, personal financial planner.
But even the cheapest credit options, such as payroll-deductible loans or real estate financing, should be contracted with caution. The value of the installments, which you will probably live with for a long time, has to fit your budget with ease. "The plots become harmful if they consume 30% or more of income", warns financial educator Mauro Calil.
Not to be wrong, the general rule is one: before you take out any kind of loan, the first two questions that should come to your mind are: "Do I really need this?" and "Do I really need this now?" Always responding sincerely, you will never buy anything on impulse again.
Get to know some of the most common credit options on the market, and consider what to consider before hiring each one:
1. Overdraft
Easier credit to obtain, and therefore one of the most expensive on the market, is triggered when your account goes into red. Your use should be an exception in case of emergencies, such as those months when you were fined or had an unexpected medical expense. When used to cover the bill for a day or two [until salary drops], it may be worth it. But is it not worth it when it is used for many days? Explains Leonardo.
Monthly Interest Rate: 8% to 15%
2. Credit Card
If used with caution and planning, credit card can be a great financial tool. The computer or the fridge broke and you have no money to buy in cash? If the installments fit the budget without tightening, splitting the expense on the interest-free credit card may be a good solution. The danger comes, however, when you start using revolving credit, which happens when instead of paying the entire bill, you pay only the minimum. Very high interest charges fall on the amount that has been missed. ? If you can not pay 100% of the bill, contact the carrier and negotiate ?, advises Mauro.
Monthly Interest Rate: 5% to 12%
3. Personal Credit
If you have had a relationship with your bank for some time, you probably have a pre-approved personal credit limit. But be careful! Only use if you really need it. It may be worth it to replace a more expensive debt. For example, if you are using a high overdraft amount, you can simply take out personal credit and replace debt. But be careful not to keep going overdraft anyway? Warns Leonardo.
Monthly Interest Rate: from 2% to 6%
4. Real Estate Financing
It has one of the lowest interest rates on the market, but still has no miracle. The bank charges a smaller amount to lend the money because, in the event of default, it takes the financed property and can sell it to cover its loss. It should be contracted with an additional concern with the value of the installments, as the financing period, which is usually longer. You don't want to spend 10 to 20 years hanging until you can pay off your own home, will you?
Monthly Interest Rate: from 0.7% to 1.5%
5. Car Financing
As in real estate financing, the automobile usually has lower interest rates, as the asset itself is the guarantee of the loan.However, unlike a property, the car cannot be considered an investment, as it begins to depreciate by the time it leaves the dealership. In addition, it implies a number of maintenance expenses, which must be considered in the budget beyond the value of the installment. Mauro recommends that the best option for buying a car is to save money to pay cash or make a consortium.
Monthly Interest Rate: from 0 (with 50% input) to 2.5%
6. Payroll loans
Being linked to salary, the risk of default is low and the bank ends up charging the lowest interest rates in the market. An advantage over personal credit is the possibility of releasing larger amounts. But this can also be a negative point: instead of lending, always prefer to save money to buy in cash. On the other hand, this can be a light at the end of the tunnel for those heavily indebted. Swapping several expensive debts for a cheaper one that fits your budget is a smart decision, as long as you buckle up and stop spending until the situation returns to normal.
Monthly Interest Rate: from 1% to 2.5%
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