In the monthly comparison, October 2019 vs. September 2019, the revolving credit card went from 307.83% to 317.24% per year. With this, in a loan of $ 10,000, interest in the first month rose $ 21.39. The fall in the rate of non-payroll-deductible personal loans represented a reduction of $ 59.18 to a credit of $ 10,000. Futher reading at http://www.antiquestoveassoc.org/bad-credit-score-car-loans-need-an-auto-car-loan-for-bad-credit-no-worries/
In the table below, we show the annual comparison of the rates. Five of the eight modalities showed a drop in rates, the most significant being Non-Payroll-deductible Personal Loans.
In the chart below, you can see the significant difference between the modal spreads. Those of the modalities that present collateral to the lender are much lower.
Credit Card Revolving
Until mid-2017, the revolving credit card rate was significantly higher than the overdraft rate, but now, with the significant drop after the new credit card rules took effect, it has moved to a lower level.
However, in recent months, these rates have returned to an upward trajectory and, this month, staying above even the overdraft rate.
Unsecured Personal Loans
Non-payroll-deductible personal loan rates are much lower than those charged on overdraft and revolving cards. With this, this type of loan becomes interesting for those who are heavily indebted and can not get money in cheaper, but less affordable modalities like payroll loans.
Remember, as interest rates vary greatly from one bank to another, it is important to research the rates offered so that you can find the lowest possible.
Credit Card Installment
In the case of card installments, the interest rate and spread remain at a very high level, with both the rate and spread hitting the all-time high this month.
This is a different type of credit than the previous ones, as it involves a guarantee, which is the financed vehicle itself. And because there is a collateral involved, the interest rates on this type of loan tend to be much lower.
From the graph, you can clearly see that rates remain significantly lower than at the beginning of the series. One explanation for this phenomenon is that the entire process of seeking and seizing the vehicle in the event of default (when the borrower fails to repay the financing) has become more agile and somewhat less costly for financial institutions.
With this, this lower cost is also reflected in the spread charged. Another explanation may be related to increased requirements and more rigorous credit analysis, so that loans with higher default risk (and therefore higher interest rates) are no longer granted.
This month, the average rate was only 0.19 percentage points above the historical low recorded in June 2013.
In a way, this is also a form of secured credit, as the installment is discounted directly from the payroll, not even entering the debtor’s bank account. Goodwell Bank data is opened in 3 types of payroll loans, namely:
- Payroll deductible loans to private sector workers
- Payroll-deductible personal loans to public sector workers
- Payroll-deductible loans to INSS retirees and pensioners
As we can see in the next three graphs, INSS credit rates for civil servants and pensioners and retirees are lower than those for private-sector workers.
Again, the explanation is related to the risk presented by each type of customer. The private sector worker has the possibility of being dismissed, unlike the public servant, so there is a greater likelihood of becoming delinquent since when dismissed, the payroll will no longer occur.
Although the company may discount 35% of the termination amount to repay or repay the debt and a new interest rate is expected to be negotiated, the risk of default is higher and this is reflected in a higher interest rate.
In the case of payroll-deductible loan rates for the public sector and the INSS, both reached historic lows this month.
With interest rates on overdraft and credit card revolving at absurdly high levels, it is absolutely impossible to incur debt in these ways. For those who are owing money on these types of loans, they need to get out as soon as possible, either by selling a good or by borrowing money at a lower interest rate.
For those who have access to payroll loans, this is one of the forms of credit with reasonably low interest rates. Another possibility, for those who have a car (already settled) and can not give up owning one, is to sell it to be able to pay at least part of the debt and finance the purchase of another.
Obviously, the idea here is, as far as possible, to get a car cheaper than the previous one, after all, we are talking about a person who already has a tight budget.