Personal Loan Truths to Lose Fear of Applying for Credit

There are still many myths about personal credit in Brazil and much is due to the country history of abusive interest rates and poor financial orientation to the population. The Brazilian has a love-hate relationship with personal credit. Despite being considered as a way to hurt the budget and a debt generator, the loan remains one of the main means to close the month in blue.

If used well, it can not only help pay off debt, but also represents a major shift your business needs to expand, for example. Like everything involving financial health, the decision to borrow should be carefully analyzed, with clear and achievable goals set. To lessen this bad stigma surrounding loan applications, let’s talk about some myths surrounding this credit model?

1. Loans Are Always Bad

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When we are in a very critical financial situation, we often get lost in the interest rates charged on different slips. At some point, we do not understand what you are paying for, just hoping to end soon.

When this happens, the best solution is to merge all debts into one, with the interest rate under control. The loan, in this case, can help balance the accounts and have greater control over the budget by pooling all debts in one installment.

2. Use credit card / overdraft to supplement income

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The credit card is used as a supplementary income for 20% of users, according to a survey of SPC Brazil. The overdraft is also commonly used to make the dreamed off at the end of the month.

What is largely overlooked by most people is that credit card and overdraft are a form of monthly pre-approved and renewed loan limit. Both are treated more naturally and acceptably compared to the personal loan. And that is a big mistake! Interest charged on credit card and overdraft amounts to 300% per year. By comparison, for example, Mutual’s average interest rate is 79% per year, which is ⅓ cheaper.

3. You need to go to the bank to get a loan.

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This is a major myth that has been crumbling in recent years as new financial services models such as those offered by fintechs advance. At Mutual, for example, the process of applying for a loan is becoming simpler and more affordable. Today, it is possible to simulate and contract a loan in a matter of minutes on your mobile phone without leaving your home.

4. I am not negative and yet I cannot get a loan

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The negativity of the name is not an obstacle when hiring a loan, not the only issue to be addressed in time to offer credit. The interest rate charged is based on the risk of this credit being paid or not.

Not having a financial history (other loans, credit card, or payables) in your name makes analysis difficult. Without it, companies cannot identify your borrower profile. It is therefore important to keep a good track record for the market to identify you as a good payer.