Rio de Janeiro implements new rules for payroll loans

The Government of Rio de Janeiro has implemented new regulations for payroll-deductible loans to prevent over-indebtedness and increase protections for civil and military servants, retirees, and pensioners. The decree, issued by acting governor Ricardo Couto, limits total voluntary deductions for loans and financing to 40% of monthly income. Within this limit, 35% is allocated to loans and other operations, while 5% is reserved specifically for payroll credit cards.

To prevent excessive debt, new loans are prohibited if the sum of mandatory, compulsory, and voluntary deductions reaches or exceeds 70% of the payroll base. The administration also holds the authority to block new credit authorizations if there is a risk of excessive income commitment.

Furthermore, the regulations introduce a cap on the Total Effective Cost (CET) of new operations at 2% per month. Financial institutions are now required to provide transparent information before contracting, including interest rates, number of installments, financed amount, and the total final cost to the borrower. The rules also include expanded protections for individuals aged 60 and older.