CONSÓRCIO EM 2021: Vale a pena? É melhor que FINANCIAR?

Today we're going to talk about consortiums. Whether it's

for a motorcycle, a car, a

house, or anything else,

nowadays there are consortiums for everything. Is it worth

it? Stay with me and we'll

learn how to analyze it to see if it could

be good for you. I don't know if you know,

but the consortium is a

Brazilian invention from the 1960s, a time when

access to credit wasn't so common.

Employees of Banco do Brasil

decided to get together, everyone

paying a monthly amount to accumulate

this sum, and then a

winner would be drawn to receive the

entire amount to spend however they

wanted. Later, this was

professionalized, with various

triggers added so that financial institutions

could offer it as a

product from Brazil. Then it

began to be offered

internationally in Latin America and

also quite strongly in several

other countries around the world. Today,

consortiums also exist, and consortiums aren't just

for motorcycles, cars, or houses, which are

common; nowadays there are consortiums for

everything. So in this video, we're

not going to use a specific example;

we'll just use the concept so you

can understand and see if it makes sense for

you at this moment. Life and everything

else, even though all these years

have passed, the idea of ​​a consortium

remains the same. The difference is that

now there's an administrator,

usually a financial institution, that will handle all the

administration and organization,

obviously profiting through the collection

of fees. But what's the idea? Let's take an

example, just to pretend to be specific at the

beginning, to make it very clear what a

consortium is. For example, a car. So,

some people want to

buy a car worth R$50,000,

so the financial institution will offer this

consortium, right, for R$50,000, where

all the participants, this group of

participants, everyone will

pay a certain amount monthly. The sum of

this amount is basically R$50,000,

and every month one person within this group

will be drawn, will take this amount

home, will be able to get this

consortium letter, which is what it's called, and

will be able to buy their own

car, obviously. Then they continue

paying until the end of the period. A

consortium has a

pre-determined period, so for example, you

join a consortium to pay for

60 or 72 months, which is an example.

So, even if you're

drawn early on, you'll

continue paying those installments until the

end of the period. And besides that, it

depends on the type of consortium, but it's very

common to have a second winner

each month. The second winner is the one who makes

the highest bid, so you can bid a

larger amount, for example, 30, 40, or 50

percent of the value of that consortium letter.

You bid, and then you pay

that amount all at once, and then you're

awarded the total value.

Obviously, you'll also continue

paying the remaining amount until the end,

but you get the entire amount at once to

pay for your vehicle. Lucas, the

idea seems very good. So, a

consortium is a type of investment,

and that's not the first thing we think of. It's

not an

investment, quite the opposite,

actually,

because you'll be giving your

money to someone to manage that

money and charge fees on it,

whereas if you were actually

investing, you'd be lending your

money to someone and receiving interest on

that capital. But what are

you actually paying in the consortium? Consortium:

Theoretically, a consortium doesn't have interest;

you pay fees, and it's not a donation. There are

several fees; you have to pay insurance,

often in the range

of 15 to 20 percent of the total value.

So, if you're doing a

consortium of 50,000, in the end

you'll be paying approximately

60,000, let's say. The

extra 10,000 is the fees associated with the

operation, mainly for the

administrator (the financial institution),

the joining fee, the administrator fee, the

common fund, the reserve fund (which covers

defaults), and

sometimes life insurance (which

will be a bit longer). In short, there

are several things that make up

those 15 to 20 percent that you

have to factor in. Even though there's

no

interest, it's just fees, it's like paying

interest, since in the end you'll

be paying 60,000 for something

you'll only actually receive 50,000. So it

's not an investment. If

you were investing this money monthly,

you would be using compound interest. This

money, at the end of the period, grows

in the consortium, meaning you'll pay more to

receive less. So that's the first

thing that needs to be very clear in

your mind. But you might say it's not an

investment, but it's a good

forced savings plan. I'm not managing to

save money, but at least when the

payment comes, right? My

consortium bill, I'll have to pay it, and

naturally I'll be saving

that money for the future. And I run the

risk that I might be selected, maybe

initially, and I'll do very

well. Yes, you can look at it that way,

but this amount you're paying

monthly now, with so many options, right?

In 2021, we...

Excuse me, because we have so many

things at our fingertips. Fintechs bring so many

simple solutions for us that

someone who says they can't save

money because it's too difficult and

prefers to pay for a console... that

excuse doesn't hold water anymore. It's much

better to have the discipline to pay

that money monthly and see the

money grow, to make

compound interest, as I said, work in your

favor. But okay, I understand, it can't be

compared to an investment, but why do I

have to buy it with financing? For what

purpose? I'm going to join a

consortium. Generally, I join a

consortium because I don't have

enough money for a down payment on a

large house or to buy that item

I want outright. So, instead of

paying for a loan, which often

ends up costing double

because of the interest on the original amount,

I join a consortium because, even though

I pay 15 or 20

percent in fees, it will be much less

compared to the interest on a loan. This

line of reasoning is correct; these are the

arguments they use

to sell you a consortium. But, everyone,

you have to put everything down on

paper and consider the other variables involved.

Because, let's say, if you simply

look at the interest rate versus the interest on a loan,

you might say the consortium is

more worthwhile. But let's be clear, a consortium

has an adjustment every year. This

adjustment can follow inflation or

other indices that can be

quite high. So, every year

you'll have to pay a little more in

installments. In contrast, with a loan,

in the most commonly

chosen modalities, the installments decrease

over time. So, that's one of the things

you have to consider,

starting with the purchase. Another

thing about a consortium: unless you're

very lucky and get

drawn early on, you'll be paying

monthly for something you don't yet

own, unlike financing where you

already have the asset. So, for example,

if you join a consortium for a house,

while you're paying the installments, you

don't have the house; you'll

have other expenses because it's

a place. So you have to factor that in.

Whereas with

financing, you're already in the

place, you already have that cost

embedded in your daily life. So

you have to consider that. With a consortium, if

you're very lucky, great, you'll be

paying a lower installment than with

financing and you'll already be enjoying

more of it. When we talk about this,

we're talking about luck, where the

probability is against you, and it's

very important that you keep in mind

the probability of buying. There are many

people, and very few will be

selected in the first few months for

it to actually be worthwhile. So you

'll be gambling with luck and not

necessarily putting in the best possible outcome. Right there, down to the last detail,

what's best for me,

Lucas? But I can make a bid,

so I can get thirty or forty

percent of the value of my

consortium letter of credit, and I can make a bid and

get that whole amount. That's not

great, is it? But look how interesting, right?

In a consortium, if you make a bid, you

'll have to commit to that entire amount, and

you don't get any discount. You

're simply anticipating some

things you would pay,

and you'll pay a little bit month by

month until the end of the period. You don't get

any discount. In financing, you

take that same amount, for example,

thirty percent of the total value, and in

fact, anticipate some installments. What

you're doing is taking that

future interest and bringing it to

present interest, meaning you're paying much less

interest, and with that, you can

significantly reduce your... Anyway, three very

simple examples that I brought for you to see that

the math isn't simple. It's not one plus

one equals two. It's not the rate I

'll pay that's lower than the interest on a

loan. There are several other

variables that you have to keep in mind

to actually draw your conclusions

and see what's best for you.

Okay, but is it worth it or not?

Financially speaking, is it worth it to

join a consortium if you're relying

on luck? And if luck is on your side, then

yes, in that situation a consortium can be

very good for you. Imagine paying

a small monthly installment and

being selected in the draw right at the beginning. You'll

continue paying this smaller installment

than a loan, and

you'll already be doing well, right? You'll have already

received the consortium letter, you'll have already

bought the asset you wanted, and that's it,

great! But again, the

probability is against you. Few

people, not a minority,

will be selected at the beginning;

you'll probably be selected at the

end. And if you're going to be selected

at the end, why keep paying

money to an administrator who will be

charging you fees and everything else?

Why not use that money

with planning, let compound interest

work in your favor, so that at the end of that

same period you not only have that

money minus fees, but

that money plus all the

interest you earned? In short,

what's the big question? If you

put it down on paper, you'll see that, aside from

that part...

Financially, it might not be worth much,

but the big question is, it's

a very good story, isn't it? You approach

someone and say, "Let's

do this: you'll pay a

monthly amount, you could be drawn in

the first few months, meaning you receive

the entire amount

and can buy your house, your car,

etc. It's much faster and much

cheaper than financing." The

story sounds good, doesn't it? Now imagine

someone who works at a bank. The

bank manager calls you to offer this. It

's much simpler for them to sell you a

consortium than a loan.

Think about it: the manager calls you and says, "Folks, let's get

a loan to

buy something in so many years, pay so much

interest, and so on." It's kind of strange.

Now imagine the speech when they call

someone, saying, "Hey,

consortium here, super

cheap value that you can receive in

the first few months, and you're drawn," and so on.

So, people who

work at a bank usually

have a knack for selling this type of

product, and I don't know if it's the same for you or

the people around you,

but the vast majority of

people I know... Many people have already participated in

consortiums, and there are quite a few. I know

many people who have joined consortiums, always

because it was offered to them, because

somehow the bank approached them and

showed them that there is a possibility of

joining a consortium. So, I'd

say, "This

is a little money that I'll be paying back

each month, and I'll be

obligated to pay it back. You might be

selected, and

even if I'm not lucky, at the end of the

period I'll receive that amount, I'll be

able to buy my car, my house,

and everything will be fine." I understand that it's much

more of an impulsive decision than a

sound one. You need

financial intelligence and the ability to plan. Because if

you actually stop to analyze and see what

's best, you could say, "

I'll take this

monthly amount, I'll save it intelligently,

I'll make the interest work for me, I'll

have a slightly larger amount, I'll keep

analyzing good opportunities in the

market, and when I see a good

purchase option, I'll have a good amount

to put down as a down payment. Then I can

negotiate my interest rate better,

for example, on a vehicle. If you

put a large down payment on a new vehicle,

many dealerships will give you zero interest."

Finally, having money in hand working for

you, being able to make good

deals and everything else is much

smarter than living by

luck, right? I

'm seeing it as relying on luck to be

selected, and then, when the money comes out,

you have to use it. In short, doing

things kind of without thinking. Finally,

our channel talks about business

and money, so I can't

encourage you to join a consortium by saying it's the

best thing in the world, but at the same

time, I can't say it's not

worthwhile in a very

specific situation. Maybe it might be worthwhile for you,

but what I'm telling you is: analyze it

carefully. Just because someone gives you the

idea, or a bank manager calls you

saying there's an opportunity, doesn't mean

you should rush to join a

consortium. Identify all the

points we've brought up here, study it

more deeply, and see if it makes sense

for you. Maybe there's a

very specific situation where you'll

use the consortium, maybe you'll make a

bid after a few months and

it will work very well for you,

maybe it's worthwhile. But even if it's not

worthwhile, and I hope you're lucky enough to

be selected early on, then

yes, it's definitely worth it.

So, what do you think about consortiums? Have

you ever participated in a consortium? Do you know someone

who has?

Leave your opinion in the comments! What do

you think about this?

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