The Brazilian Supreme Court (STF) unanimously ruled in favor of validating the release of payroll loans for beneficiaries of social programs. The judgment took place in the virtual plenary, a format in which there is no debate and the ministers record their votes in an electronic system.
The legal action was filed by the PDT party in opposition to changes in the regulations for payroll loans.
The Brazilian Supreme Court (STF) has authorized payroll loans for those receiving Auxílio Brasil (Brazil Aid) and other benefits.
The PDT questioned, among other points, the authorization for individuals receiving the Continuous Benefit Payment (BPC) and participants in programs such as the former Auxílio Brasil (currently called Bolsa Família) to apply for payroll loans, in which installments are deducted directly from their income sources.
Furthermore, the PDT raised questions about the increase in the income limit allowed for employees with formal employment contracts and beneficiaries of the National Social Security Institute (INSS) who can commit their income to payroll loans, which went from 35% to 45%.
The case's rapporteur, Nunes Marques, had already ruled in October in favor of maintaining the validity of a rule that expanded the margin for payroll-deducted loans, allowing their use by beneficiaries of social programs.
Access to payroll-deducted loans
According to Nunes, the Constitution does not establish any limitation that justifies the repeal of a rule that expands access to payroll-deducted loans.
He argued: “The new limits on the loanable margin do not contradict the constitutional principles alleged by the author. To go beyond this Court's role as a negative legislator would imply interfering in the analysis of discretionary policy.”.
The minister also stated: “Judicial intervention is justifiable in situations of paralysis of political powers or widespread violations of fundamental rights. Expanding arguments related to excessive debt and large-scale fraud, while it may make some practical sense, reflects a disagreement with public policy, not a clear unconstitutionality.”.
Nunes Marques highlighted that the legislative decision to establish the new regulations aimed to "offer Brazilian families, who were facing difficulties due to the pandemic and rising food prices, an accessible credit option, especially to pay off more expensive debts.".
What are the benefits of a payroll loan?
Payroll loans offer several benefits, especially for those who have access to this type of credit. Some of the main benefits include:
- Lower interest rates: Payroll loans generally have lower interest rates compared to other forms of credit, such as personal loans or credit cards. This is because the installment payments are deducted directly from the salary or benefits, which reduces the risk for lenders.
- Ease of approval: Payroll loans are easier to approve, since the main guarantee is the borrower's income. This makes this type of loan accessible even to people with less favorable credit histories.
- Fixed payments: The installments for payroll loans are fixed throughout the loan period. This facilitates financial planning, as the borrower knows exactly how much they will pay each month.
- Extended deadlines: Payroll loans typically have longer repayment terms compared to other types of loans. This can reduce the monthly payment amount, making the loan more affordable.
- Access to credit even with restrictions: People with credit restrictions or a negative history can still obtain payroll loans, provided they have a stable source of income.
- Automatic discount: Loan installments are deducted directly from your paycheck or social security benefit, eliminating the need to remember to make monthly payments.
- Flexible use of funds: The funds obtained through a payroll loan can be used for various purposes, such as paying off debts, making investments, paying medical expenses, financing studies, among others.
It's important to highlight that, despite the benefits, payroll loans also have some limitations, such as the need to have a regular source of income and the possibility of committing a significant portion of monthly income. Therefore, before applying for a payroll loan, it is essential to carefully assess your ability to repay and consider whether this is the best option to meet your financial needs.
How do I know if I'm eligible for a payroll loan under the Auxílio Brasil program?
The Auxílio Brasil (formerly known as Bolsa Família) payroll loan is a specific type of payroll loan intended for beneficiaries of this social program. To find out if you are eligible to apply for an Auxílio Brasil payroll loan, follow the steps below:
Being a beneficiary of Auxílio Brasil
First, you must be a beneficiary of the Auxílio Brasil program. This means you must be enrolled in the program and receive regular payments from this benefit.
Check the financial institution.
Loans secured by the Auxílio Brasil program are generally offered by financial institutions affiliated with the government. Check if the financial institution you intend to apply for the loan with offers this option.
See the terms and conditions.
Each financial institution may have its own terms for offering payroll loans under the Auxílio Brasil program. Therefore, contact the financial institution of your choice for detailed information on requirements, interest rates, repayment terms, and credit limits.
Required documentation
Be prepared to present the documentation required by the financial institution. This may include identification documents, proof of income (in this case, the Auxílio Brasil payment itself), proof of residence, and other relevant documents.
Check the available credit limit.
Before applying for a payroll loan, check if you have available payroll deduction capacity. Payroll deduction capacity is the percentage of your income that can be committed to paying loan installments. It is regulated by law and may vary depending on the type of beneficiary and the financial institution. Make sure that the value of the loan installments does not exceed your payroll deduction capacity.
Negotiate carefully.
When considering a secured loan from the Auxílio Brasil program, carefully assess your ability to repay and the terms offered by the financial institution. Remember that the loan will be automatically deducted from your benefit, and you need to be sure you can afford this expense.
Protecting yourself against blows
Be aware of potential scams related to payroll loans. Make sure you only deal with legitimate financial institutions and avoid sharing personal and financial information with untrusted third parties.
See also: Desenrola Brasil Program: Learn how to clear your name with this benefit
September 12, 2023
Graduated in Literature – Portuguese/English, and creator of the website Successful Writer, seeks to expand everyone's knowledge with relevant information on a variety of topics, as a writer. At Vaga de Emprego RJ, she provides opportunities and tips on the job market.