Are you paying for a loan or financing? Did you know that you can port your debt to another bank by benefiting from the lower interest rates offered by the new financial institution? This is an opportunity allowed by the scenario of competition between banks and which many people are taking advantage of. So much so that in the first quarter of 2017, portability of credit operations reached USD 2.891 billion, according to bank data.
The number of loan and financing portability operations almost tripled compared to the same period last year. Keep reading and learn how to take your debt to another bank and take advantage of the portability operation.
What is credit portability?
Credit portability is the transfer of a debt (loan, financing, etc.) from one bank or financial institution to another bank, the procedure being performed at the wish of the debtor (who may be an individual or legal entity). Portability takes advantage of competition between banks to benefit the customer who can then negotiate their debt at lower interest rates.
Steps to Credit Portability
- First the consumer must raise the amount of interest and penalties he currently pays. Your bank should collect this information for the consumer on the same day. The information must be delivered on paper.
The information to which the consumer is entitled to receive is: total debt amount, amount of each credit installment, installment maturity, interest rate charged on the total amount and transaction installments, debt settlement date. There should also be collateral data or other forms of collateral required at the time of the loan – if any.
- You should consult with other banks to find out what charges they would charge you to repay your debt. In addition to consulting these rates with all other banks, you can do an internet search or access the bank website.
The bank page usually lists the rates charged by all people banks in all financial transactions.
- If you have found a bank that charges more attractive rates, great. Talk to a manager of this new bank and talk about your desire to migrate credit. With this amount in hand, you should ask the new bank for a simulation of credit portability, detailing the costs that will be included in the composition of the new calculation, the Total Effective Cost (CET), which corresponds to the sum of all expenses that are included in credit operations. Attention! Check to see if new services or rates have been added which may be questioned.
- You will need to request, in writing and in person, the credit transfer from your current bank to the new bank of your choice.
- You are done, the current bank has up to 5 business days to make this credit transfer. You will then repay your debt to the new financial institution of your choice.
- What kind of debt can be transferred?
It is possible to portability any type of loan, be it a personal credit, or even higher debts such as a mortgage, for example. As such, you can port your individual credit lines (credit card, overdraft, vehicle finance, mortgage, personal and payroll loans), and have every right to choose which bank to take your debt to. .
Portability is an extremely interesting opportunity for people on payroll loans from civil servants and INSS beneficiaries, as the payroll interest rate ceiling for federal servants has dropped from 2.5% to 2.2% per month. For INSS retirees and pensioners, the percentage went from 2.34% to 2.14% per month.
What should I consider when choosing the bank for portability?
There are several issues that need to be considered as to whether migrating your debt to another bank will be beneficial. Check out some of them:
Check out the interest rates used by banks, you can make this query through the website of the bank or the bank agencies. If after the survey you find that there are banks offering lower interest rates than the bank you borrowed, opt for portability.
Request the balance of your debts from the bank where you made the credit. We emphasize that the bank needs to deliver this data to you within 15 days. With this document, look for the bank you want to migrate to and request a simulation of credit portability. The simulation should make clear all costs included in the composition of the new calculation, the Total Effective Cost (CET), which is the sum of all expenses included in credit operations.
Installments x interest rates
It is important that you compare the amount of the installment with the interest rate. The higher the number of installments, the lower the installment but, consequently, the greater the debt, since the amount will be exposed to interest for a longer time. Therefore, it is not always interesting to opt for smaller installments.
Benefits of the operation
Check to see if the operation will really be beneficial for you, before continuing the process, we also suggest that you talk to the bank manager at which you made the loan, they may have a counter-offer and may offer lower interest rates.
If you need help
If you have received the simulation and proposals from the banks but are not 100% sure of the calculations, you can consult a specialist, friend or relative who has some knowledge about calculations or Procon. It is important that you do not go blind in the process, as banks may offer to sell other unauthorized services and fees, unbeknownst to the consumer, which can make credit more expensive and lose the advantage of lower interest rates.
The number of loan and financing portability operations almost tripled compared to the same period last year.
Can portability not be accepted?
Yes, the bank that offers a lower interest rate may deny the portability of its debt, but must give written reasons for the refusal, as provided for in the Consumer Protection Code. On the other hand, the bank in which you have the debt, before portability, cannot deny the information or create difficulties to have access to the outstanding balance. Not even deny the discharge when requested by the institution that will assume the credit.
What can be charged?
In the portability of a credit there is no fee charged by the new or old bank. In addition, financial institutions are prohibited from aggregating to debt portability any offerings (such as insurance, bonds, package membership, etc.) that add any cost to the customer.
One issue that has to be noted is whether or not to open a current account with the new bank or financial institution, as for some (in credits that are paid by deposit on account) this procedure is necessary. Other than that, you should not accept the obligation to open an account.
In addition, we point out that the bank cannot charge and credit past the IOF (Tax on Financial Transactions), that is, the tax on all consumer credit operations.
Are There Different Rules For Real Estate Credit?
Yes. Mortgage portability may incur additional charges. For example, the client will have to pay the property registration office, as the financing agreement will need to be changed by transferring the debt to the new bank.
You still need to change your home registration certificate, as the process means your account is being transferred. Check the costs of notary documentation and property inspection to determine if the portability process is really beneficial for you.
- You may want to migrate your credit to a bank that charges more attractive rates. However, the bank has the right not to accept portability. In this case, you should try with another institution or stay with the credit at the current bank.
- When doing portability banks may require you to open a checking account. In this case, it is better – besides transferring credit – to close your account with the bank where the debt was.
- The bank cannot refuse to provide portability. It is a consumer’s right to take their debt to another financial institution.
- The new bank chosen can offer the installment of the migrated debt in more installments. If this is the condition for portability, be careful. Installment of a debt in more installments may mean an increase in the debt value.
- The bank that will port will be entitled to a deadline to complete the process. In this case the deadline is up to 5 business days, but the transfer is usually faster.
We point out that the bank does not oblige one bank to buy debt from another. Therefore, you should seek information about portability with the bank chosen to transfer the debit.
Settlement of your debt with the bank from which you intend to transfer your debt must be made by the bank to which you are taking the transaction, not by you.