In Two Years, Auto Loans Increase by 275%

Written by Bruno Teles

Published on 23/02/2023 at 14:30

Empréstimos com veículo (Foto/divulgação)

Be the first to react!

Brazilian Families Are Becoming Increasingly Indebted, According to the Consumer Debt and Default Survey (Peic) by the National Confederation of Commerce of Goods, Services, and Tourism (CNC). Data Show That in 2022, 78 Families for Every 100 Were in Debt from Loans with Vehicles as Collateral, Which Is a Record for the Historical Series of the Peic That Began in 2010.

Despite the basic interest rate (Selic) being 13.75%, Brazilians are unable to meet their debts because inflation has eroded the purchasing power of money. For this reason, many have begun to look for alternative forms of credit with better loan rates.

One of these possibilities is the vehicle loan, that is, auto-equity, which uses cars as a payment guarantee. According to data provided by Creditas to Forbes, there was a 275% increase in requests for this type of credit between 2020 and 2022. The main uses for this money were debt repayment, which increased by 210%, and the intention to start a business, which rose by 223%.

This trend reflects a worrying moment in the Brazilian economy: “Brazil has a very complicated reality in family financial management. When basic rates are high and salaries are not enough to cover necessary expenses, resorting to some form of credit to balance the accounts is inevitable,” explains economist Thiago dos Santos Coelho.

ARTICLE CONTINUES BELOW

Luana Bichuetti, Vice President of Auto Equity at Creditas, Believes That the Increase in Vehicle Loans in the Category Over the Last Two Years Is Positive, but Still Limited. According to Her, This Is Due to a Lack of Understanding About the Product and the Distrust of People Regarding the Pledge of Their Assets as Collateral.

However, the vice president points out that when people understand the product, the option becomes more appealing for those who need money. At Creditas, for example, it is possible to request a loan ranging from R$ 5,000 to R$ 150,000 with extended installments and much lower interest rates than those charged on other types of credit.

The average interest rate for personal loans is 7.66% per month and 7.96% for overdraft, according to data from Procon-SP. Meanwhile, for vehicle loans offered by financial institutions for auto-equity, the rates are lower: 1.49% per month at Creditas and 1.39% at Banco Pan.

Thus, Bichuetti predicts that the levels of indebtedness among Brazilian families will remain high this year due to the continuation of the high Selic rate by the Central Bank. Therefore, she argues that people should understand that pledging their vehicle for a loan does not mean losing it. The car remains with them and will only be repossessed if the installments are not fulfilled.

Other financial institutions also offer auto-equity (vehicle loans). These include: Banco do Brasil, Santander, Banco BV, C6 Bank, and others. These loans can be an interesting alternative for Brazilian families who need financial resources due to the high rates charged by traditional banks.

In Two Years, Auto Loans Increase by 275%

Vehicle Collateral Loan

In the cold desert of Ladakh, where it hardly rains, engineer Sonam Wangchuk created the ice stupa, a tower that freezes winter water and stores it for irrigating crops in the spring, a simple engineering feat that mimics nature.

Libya built over 4,000 kilometers of underground pipelines to bring water from the Sahara to coastal cities in a project that the government itself called the Eighth Wonder of the World.

Almost 6,000 residents live concentrated along a single street nearly 9 km long in the interior of Poland. Houses form a continuous row, and behind them, narrow agricultural strips emerge, creating one of the most unusual rural patterns in Europe.

Chinese woman planted trees for decades while sand buried part of her house, received $5,000 from an American in 1999, and helped transform the desert into a forest of 8 million trees in China.

Desert sand, previously discarded for being too smooth for concrete, becomes an ecological brick in the United Arab Emirates, dispensing with Portland cement, curing at room temperature, and attempting to transform dunes useless for construction into raw material for a new arid engineering.

Described by astronauts as one of the most unlikely natural phenomena on Earth, the Okavango Delta spreads over up to 15,000 square kilometers in the middle of the desert and transforms Botswana into a living labyrinth of channels, islands, and flooded areas.

Two helicopters, 41 people, and over 38 tons of bait were mobilized on a remote Pacific atoll to eliminate rats; five years later, native trees grew by 5,000%, seabirds gained habitat, and the rainforest began to regenerate.

Two new 300cc models from QJ Motor are expected to arrive in Brazil as SBM to target the CB 300F and shake up the low-displacement market, with more power and liquid cooling than Honda.

Federal Police involved in the case to identify the person responsible for hacking the Civil Defense system, which sent ten false alerts, frightened residents of different capitals, and turned messages about real risks into notifications with “misanthropy” and even alien attacks.

Extreme drought causes ghost village to reappear at the bottom of the reservoir that supplies Athens, revealing houses, a school, and ruins swallowed since the 1980s as the lake shrinks and exposes the water crisis threatening the capital of Greece.

Camaro may reappear in 2027, but not as you remember: Chevrolet prepares the return of the icon with four doors, manual transmission, and an extreme performance version to face the new era of sports cars.

In Virginia, a family of small-scale farmers refused to swap the countryside for the city and transformed their milk production into award-winning artisanal cheese from Mantiqueira de Minas.

In Two Years, Auto Loans Increase by 275%

Vehicle Collateral Loan

In the cold desert of Ladakh, where it hardly rains, engineer Sonam Wangchuk created the ice stupa, a tower that freezes winter water and stores it for irrigating crops in the spring, a simple engineering feat that mimics nature.

Libya built over 4,000 kilometers of underground pipelines to bring water from the Sahara to coastal cities in a project that the government itself called the Eighth Wonder of the World.

Almost 6,000 residents live concentrated along a single street nearly 9 km long in the interior of Poland. Houses form a continuous row, and behind them, narrow agricultural strips emerge, creating one of the most unusual rural patterns in Europe.

Chinese woman planted trees for decades while sand buried part of her house, received $5,000 from an American in 1999, and helped transform the desert into a forest of 8 million trees in China.

Desert sand, previously discarded for being too smooth for concrete, becomes an ecological brick in the United Arab Emirates, dispensing with Portland cement, curing at room temperature, and attempting to transform dunes useless for construction into raw material for a new arid engineering.

Described by astronauts as one of the most unlikely natural phenomena on Earth, the Okavango Delta spreads over up to 15,000 square kilometers in the middle of the desert and transforms Botswana into a living labyrinth of channels, islands, and flooded areas.

Two helicopters, 41 people, and over 38 tons of bait were mobilized on a remote Pacific atoll to eliminate rats; five years later, native trees grew by 5,000%, seabirds gained habitat, and the rainforest began to regenerate.

FIRJAN’s mega plan of R$ 526.3 billion for Rio de Janeiro aims to revive Brazil’s largest industry, with two-thirds of the investments going to oil and gas.

China signals an increase in beef imports, Brazil has already consumed 70% of the 1.106 million ton quota and seeks to renegotiate the tariff that jumps from 12% to 55%, while demand from the US also skyrockets.

Food inflation rose 302% in 20 years in Brazil, but the supermarket changed: purchasing power yielded 87% more mortadella and 31% less fruit, and ultra-processed foods took over the cart.

Petrobras sells the first batch of 3,800 m³ of aviation fuel made with certified soy, capable of reducing emissions by up to 70%, in an unprecedented project that anticipates the aviation sector’s requirements expected for 2027.

Brazil enacted a national minimum wage for teachers at R$ 5,130 for a 40-hour workweek, raised the minimum wage for basic education after a 5.4% adjustment, and established a rule that prevents increases below inflation in the coming years across the country.

Two new 300cc models from QJ Motor are expected to arrive in Brazil as SBM to target the CB 300F and shake up the low-displacement market, with more power and liquid cooling than Honda.

Federal Police involved in the case to identify the person responsible for hacking the Civil Defense system, which sent ten false alerts, frightened residents of different capitals, and turned messages about real risks into notifications with “misanthropy” and even alien attacks.

Extreme drought causes ghost village to reappear at the bottom of the reservoir that supplies Athens, revealing houses, a school, and ruins swallowed since the 1980s as the lake shrinks and exposes the water crisis threatening the capital of Greece.

Camaro may reappear in 2027, but not as you remember: Chevrolet prepares the return of the icon with four doors, manual transmission, and an extreme performance version to face the new era of sports cars.

In Virginia, a family of small-scale farmers refused to swap the countryside for the city and transformed their milk production into award-winning artisanal cheese from Mantiqueira de Minas.