Brazil’s New Private-Sector Payroll Loans Jump in August as Rates Hover Near 3.8% a Month

Overview

• Loan concessions reached R$6.066 billion in August, up 18.7% from July, according to the Central Bank.
• The average interest rate for private-sector payroll-deductible credit was 3.79% per month in August, slightly above July’s revised 3.75%.
• Through July, the new line averaged about 3.9% per month versus 2.6% on legacy convênio contracts and roughly 6.1% on non‑consigned personal loans.
• The Central Bank attributes the pricing gap to borrower risk, noting more customers work at smaller firms, have shorter tenure and earn lower incomes.
• There is currently no legal interest-rate ceiling for the new modality, and the labor minister has said a cap could be imposed if abuses are detected.