Payroll loan is a way to get credit without having to deal with very high interest rates. But do you know how this type of transaction is calculated? Let’s check it out.
The biggest advantage of payroll loans , compared to other forms of personal loans, is the interest rates . Loans granted to Social Security retirees and pensioners and public servants have a ceiling for interest rates. For those working in private-sector companies with a formal contract, the rate may vary depending on the region and each bank’s own or financial policies.
In September 2017, the Ministry of Planning set a maximum rate of 2.05% per month or 27.57% per year for civil servants . In the same month, the National Social Security Council approved a maximum rate of 2.08% per month or 28.02% per year for retirees .
In the private sector , the variation between financial institutions was between 2.6% and 3.1% in 2017.
By measure 681 of July 10, 2015, the debt limit of each installment was set at 35% of net salary. Of these 35%, 5% is for credit card debt only.
Let’s see an example?
Net Income: $ 1,000
Maximum debt $ 350.00 of which $ 50 of this limit can only be used for card payment.
To make the necessary calculations for a loan there is a very important number, the financing coefficient , which can be obtained through the formula:
CF = [i / 1 – (1 + i) -ⁿ]
But you can rest easy! The Central Bank of Brazil offers the Citizen Calculator to make our lives easier.
Amount of the installment
The most important calculation is usually the value of the installment and can be done quite easily.
Let’s say the employee needs $ 5,000 and he doesn’t want to spend more than 1 year paying. Looking at the interest rate table of the chosen institution (also available on the Central Bank website) comes to a rate of 2.6% per month.
Putting these numbers on the machine, the installment would be $ 490.00. Considering the 35% indebtedness rule, this situation would only make sense for those with a net salary of R $ 1,400.00. If the salary is incompatible, you need to rebook by increasing pay time or looking for lower rates.
It is also possible to calculate the interest. This is a very useful account if you want to compare loan proposals where the rate applied is unknown. This will help you choose the best option. Just use the calculator and enter the time, loan amount and installment.
Let’s say an employee gets a $ 1,000 loan, with interest rates of 1% per month and a repayment amount of $ 261.50. Putting these values in the machine has the answer that the payment will take 8 months.