The most common belief, and why it is wrong
The idea that interest above 12% per year is illegal in Brazil has circulated for decades. It came from a constitutional provision that was repealed in 2003 and that, even before then, depended on implementing legislation that never arrived.
Today the question is settled. Precedent (Súmula) 382 of the Superior Court of Justice (Superior Tribunal de Justiça) says, in so many words, that agreeing on interest above twelve percent per year does not, by itself, indicate abuse.
That does not mean abuse never exists. It means it is demonstrated another way.
The test that actually matters: the average market rate
The Central Bank of Brazil (Banco Central do Brasil) publishes, by type of credit operation and by period, the average rate charged in the market. That is the benchmark Brazilian case law uses.
The analysis is not simple arithmetic. A rate above the average is not automatically abusive, because an average is exactly that · there are operations above and below it. What courts examine is whether the departure is large enough to find no justification in the risk of the operation and the borrower’s profile.
Compound interest: the date matters
Compounding is the charging of interest on interest already accrued. The Superior Court of Justice settled, in binding repetitive appeal rulings, that compounding more often than yearly is allowed in contracts signed after March 31, 2000, provided it was expressly agreed.
Express agreement can be recognised when the contracted annual rate exceeds twelve times the monthly rate, a situation that reveals, by the contract’s own arithmetic, that monthly compounding was applied.
Where the abuse usually really is
In practice, the productive dispute is rarely about the headline interest percentage. It is in the accessories.
- Late-payment commission (comissão de permanência) wrongly stacked with monetary adjustment, default interest or contractual fines
- Compounding never expressly agreed, in a contract predating the applicable rule
- Fees whose charging Brazilian case law has already examined and limited, such as those tied to third-party services and contract registration
- Insurance bundled into the loan without clear consent, the practice known as tying (venda casada)
- Default charges stacked so as to exceed the admitted limits
Before filing a review action
A contract review lawsuit filed without prior analysis is usually pointless and can make things worse, because it exposes the debtor to litigation costs if the claim fails and does not, by itself, suspend the effects of the default.
Useful work starts with reading the contract and the statement showing how the debt evolved, and comparing the rate with the average published by the Central Bank of Brazil for that type of credit and period. Only then is it possible to say whether there is something to argue, and what.
Frequently asked questions
Is 8% per month on a loan abusive in Brazil?
There is no answer in the abstract. The rate must be compared with the average market rate published by the Central Bank of Brazil for that specific type of credit, at the time of contracting. In high-risk products, such as overdrafts and revolving credit card lines, market averages are far higher than for a secured loan.
Does a review lawsuit suspend my instalments or clear my name?
Not automatically. Filing alone does not suspend the debt or prevent blacklisting. Measures of that kind require a specific court decision, which demands a consistent demonstration of the amount you consider due and, frequently, a deposit of the undisputed portion of the instalments.
What is comissão de permanência?
It is a late-payment charge applied under Brazilian bank contracts after the due date. Its lawfulness is conditional on not being stacked with other default charges. The case law of the Superior Court of Justice has limited both its ceiling and its combination with monetary adjustment, default interest and contractual fines.
Where do I find the average market rate?
The Central Bank of Brazil publishes the average rates of credit operations by type and by period, in a public database. Choosing the correct type is decisive · comparing an unsecured personal loan with the average for vehicle financing produces a worthless conclusion.
Can I renegotiate directly with the bank instead of suing?
It is often the fastest route, and it does not prevent a later argument about charges, provided the renegotiation does not contain a broad, unrestricted release of claims. Reading the release clause before signing the agreement is the precaution that most often prevents regret.
Informational content only, with no offer of services for any specific case, in line with Rule 205/2021 (Provimento 205/2021) of the Brazilian Bar Association (OAB).