Loan deducted directly from salary: how does it work?

Have you ever heard of a payroll loan? If not, know that this option is known as loan deducted directly from salary. But how does it work? loan deducted directly from salary? If this is one of your main questions, just continue reading until the end to find out the details! 

How does the loan discounted directly from your salary work?

The payroll loan, known as a loan discounted directly from the salary, is a type of credit offered to salaried workers, retirees and pensioners. 

In this type of loan, the installments are automatically deducted from your salary or INSS benefit, which reduces the risk of default for the bank and allows you to offer lower interest rates. See how it works! 

Recruitment

The worker or beneficiary chooses the financial institution and applies for the loan. The bank or financial institution usually performs a credit analysis to assess the applicant's ability to pay, although this analysis is less rigorous than for other types of loans, given the lower risk involved.

Payroll discount

After approval, the amount of the installments is automatically deducted from the payroll or benefit before the salary is credited to the applicant's account. 

This guarantees the bank that the installments will be received, as the discount is made directly by the company or the body responsible for payment.

Commitment limit

Brazilian legislation establishes that the value of the installments of the payroll loan cannot exceed 35% of the worker or beneficiary's net monthly income. 

Within this limit, 5% must be allocated exclusively for expenses with a payroll credit card.

Terms and conditions

Payment terms and installment amounts vary according to the financial institution and the applicant's profile. 

In general, the payment term can be up to 84 months (7 years) for loans granted to INSS retirees and pensioners.

What are the advantages and disadvantages?

Initially, this loan option offers a variety of benefits to those interested. For example:

• Lower interest rates compared to other types of loans;
• Ease of hiring, with fewer requirements for approval;
• Automatic discount on installments, avoiding forgetfulness and late payment fines.

However, in addition to the advantages, it is also important to know the disadvantages of taking out a loan deducted directly from your salary. Some of the options include the following:

• Compromising monthly income can reduce the borrower’s financial flexibility;
• Less room for negotiation of installments, since the discount is made directly from the salary;
• In the event of job loss, the outstanding balance may become a debt to be paid directly by the borrower.

How to get a loan with payroll deduction?

To take out a loan with a discount directly from your salary, the first step is to choose a financial institution that offers this type of credit. 

First, research the available options and run a simulation, informing the desired amount and the number of installments you intend to pay. This simulation will help you get a clear idea of the conditions that the institution offers.

After choosing the institution, carefully check the terms of the contract, such as the interest rate, the total payment term and any other fees that may apply. 

If you are satisfied with the conditions offered and decide to move forward, it is time to make the formal loan request. 

So, be prepared to send the documents requested by the financial institution, which may include proof of income and identity. 

In addition, you will need to authorize the institution to access your payroll, allowing the installments to be deducted directly from your salary.

Once you have submitted your documentation, you will need to wait for your application to be reviewed. The financial institution will evaluate your information and decide whether or not to approve the loan. 

Written by

Juliana Raquel