How to Get a Loan in Brazil: A Comprehensive Guide
Here is a break down of what we will be covering today.
How to get a loan in Brazil?
If you’re looking to expand your business or purchase something you could not have afforded otherwise, you might be considering applying for a loan from one of the many banks and financial institutions in Brazil.
In this guide, we will take you through all the steps required to obtain a loan in Brazil and also share some tips that will help improve your chances of being approved so that you can make your dream become reality!
What are Brazilian loans?
Though you may not have heard of Brazilian loans, they are actually a popular way for citizens of Brazil to secure funding for their businesses and personal needs.
As with all loans, there are terms and conditions that must be met before approval is granted.
Understanding those terms and conditions is crucial for anyone trying to secure financing from an official lender.
Here are some essential facts about Brazilian loans
—They can only be issued by financial institutions licensed by Caixa Econômica Federal (CEF), which is Brazil’s central bank. These lenders include Banco do Brasil, Bradesco, Itau Unibanco Holding S.A., Santander Brasil and Banco Intermedium S.A.
- The funds can exclusively be used for business or home improvement purposes (not consumer purchases).
- There are two types of Brazilian loans: open credit lines and closed credit lines. Open credit lines can be used at any time, while closed credit lines require prior approval before they can be accessed.
- The interest rate on a Brazilian loan is determined by Caixa Econômica Federal (CEF) based on market conditions. The current interest rate is 11 percent per year, which is set annually by CEF’s board of directors.
- The minimum amount you can borrow with a Brazilian loan is R$50,000 (approximately $16,500).
- You must have an active bank account in Brazil to apply for a loan from one of these lenders.
- You will need to provide proof that you have enough income or capital available to repay your loan on time and with interest. Your annual income must be greater than four times your monthly expenses, or your net worth must exceed five times your monthly expenses. — The Brazilian government requires all Brazilian loans to be repaid within two years, so plan accordingly.
- If you can not pay back your loan within two years, there is an option for extending it for another year. However, if you do not pay back your loan by its due date after three years, it will become a bad debt which can affect your credit score negatively and make future borrowing more difficult.
- All payments are made directly from your bank account into CEF’s account at Caixa Econômica Federal (CEF). As such, every payment is automatically deducted from your account each month until all the principal plus interest has been paid off. — You can choose to pay back more than what you owe per month, as long as it does not exceed 10 percent of your income or net worth. If you have extra funds available and want to pay down your loan more quickly, it may be worth doing so. However, if you do not have extra funds available but still want to reduce how much time it takes for you to repay your loan, consider making smaller monthly payments over a longer period of time rather than larger monthly payments over a shorter period of time.
- You cannot cancel or delay any Brazilian loans that have already been approved by CEF unless an unexpected event occurs that prevents you from paying back your loan on time and with interest. — If you fail to make payments on your loan, it will be reported as late and will negatively affect your credit score.
- If you are denied for a Brazilian loan, there is no appeal process available at Caixa Econômica Federal (CEF). However, if you believe there was a mistake made during their approval process, it may be worth contacting them directly about it.
- The application process for getting a Brazilian loan is fairly simple. — First, you must visit your local Caixa Econômica Federal (CEF) branch and fill out an application form. You will need to provide proof of income or capital, as well as proof that you have enough funds available to repay your loan on time and with interest.
- Next, CEF will review your application and either approve or deny it within five business days of receiving it. If approved, they will send you a letter which includes all the details about your loan including its interest rate, due date, repayment schedule and other important information that you should read carefully before signing anything.
- Finally, you must sign your contract with Caixa Econômica Federal (CEF) at their local branch. Once signed, CEF will deposit your loan into your bank account immediately.
- The entire process from beginning to end takes approximately two weeks, but can be longer if there are any issues with your application.
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Getting approved for your first loan in Brazil
To understand how to get a loan in Brazil, you first need to know that all consumer credit is regulated by Consumer Protection Code.
If you are under age 18 or over age 60 and your monthly income is less than 2x of your monthly expenses (2/3 for destitute families), you can borrow up to R$10,000 without collateral (destitute families are eligible for an additional R$10,000).
To borrow money without putting up collateral from a bank or other financial institution, you will fill out Formulário Caixa – available here on CaixaBank’s website.
You’ll also need some paperwork, including proof of income and identification.
When filling out Formulário Caixa, be sure to carefully follow instructions, as many people have had their applications rejected because they missed a step.
The average time it takes to get approved for your first loan in Brazil is 7 days, but it could take longer depending on what type of application you file.
Once approved, you can withdraw funds immediately from any CaixaBank ATM using your Banco24Horas card.
Small steps towards securing your financial future
When it comes to financial literacy, all of us are on a journey. Some of us are starting out fresh and green with few financial responsibilities; some of us may have bills that go back many years.
It’s okay! Financial literacy isn’t something you can learn overnight, and it doesn’t have to be scary. When starting out your journey, it is best if you begin small.
To get started on securing your financial future now, ensure you have read through our comprehensive guide detailing how to get a loan in Brazil.
Follow these steps and see where they take you!
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