Debt: portability or refinancing?
With lower interest rates and banks searching for more attractive rates, learn the differences so you don't pay more.
Luciane Macedo _247 - The reduction in consumer interest rates in the banking system has brought the prospect of finding more attractive conditions for those who have taken on debt, whether borrowing money or financing the purchase of goods, but not without creating some trouble for the less attentive account holder, who only seeks the advertised minimum interest rates. Last week, Procon-SP (the São Paulo consumer protection agency) drew the banks' attention to the information provided, which, in the agency's assessment, still leaves much to be desired and, in many cases, ends up confusing the consumer.
The lack of clear and objective information from some banking institutions, coupled with a lack of knowledge about common debt management operations on the part of consumers themselves, is a sure recipe for financial strain. In this regard, Procon-SP, an agency linked to the Secretariat of Justice and Citizenship of the State of São Paulo, has been working on two fronts: not only holding banks accountable, but also guiding account holders.
One of the points that can cause the most confusion when studying how to quickly pay off a debt while paying less for the money borrowed from the bank is the difference between credit portability and debt refinancing.
"The lack of knowledge about the rules of these two operations is creating a loophole that allows institutions to offer debt refinancing, contracted with other banks, by releasing new loans as if they were credit portability operations," warns Procon-SP.
It is important that consumers interested in replacing contracts, whether personal loans, financing, or leasing agreements, with others that have lower rates have clear information about each transaction.
"Portability offers consumers a greater advantage because no new fees or taxes can be charged," advises Paulo Arthur Góes, executive director of Procon-SP. "That's why it's important to pay attention during negotiations."
Should you transfer your loan or refinance your debt? See below how the debt of a customer who borrowed R$ 5 was affected. When the reduction in interest rates for individuals in the banking system was announced, he still had 15 installments to pay. The initial interest rate was 2,5% per month, but he found lower rates of 2% and 1,5%. However, the debt ended up being quite different with the same 1,5% rate between loan transfer and refinancing.
While credit portability does not incur IOF (Tax on Financial Operations), which necessarily implies maintaining the same term as the original operation, refinancing does incur a new IOF charge. "Furthermore, not only can the term be altered, but also other contractual conditions, which can mask potential financial disadvantages in the exchange," notes Procon-SP (São Paulo's consumer protection agency).
In some situations, refinancing may be more advantageous, but since comparing different contracts and new ancillary charges such as IOF (Tax on Financial Operations) can complicate the account holder's assessment, it is best to compare the Total Effective Cost (TEC) of the offered operations with the same index of the original contract to be migrated. The TEC includes not only interest but also other charges associated with the credit of both operations, so that the debt holder can make an adequate comparison.
According to research conducted by Procon-SP (São Paulo's consumer protection agency) in the banking system, the CET (Total Effective Cost) is not always provided by banks when negotiating portability or refinancing with clients. Since 2008, in compliance with Central Bank Resolution 3517, banks have been required to include the CET in both advertising materials and signed contracts.
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