The founder and CEO of Zarutti Investimentos highlights that this financial product can aid in wealth planning but requires financial organization, flexibility regarding timelines, and attention to contract terms.
The growth of the consortium market has heightened interest among consumers looking to acquire real estate, vehicles, machinery, or other assets. By May 2026, the Consortium System had surpassed 13 million active participants—a record high in the historical data released by the Brazilian Association of Consortium Administrators (ABAC).
Between January and May, 2.36 million consortium shares were sold, representing R$ 232.94 billion in credit value. For Giovanni Zarutti, founder and CEO of Zarutti Investimentos, the expansion of this model also underscores the need to explain to consumers exactly when a letter of credit makes sense.
“Before choosing any product, we need to understand the client’s cash flow, assets, debts, financial capacity, and goals. The decision should be part of a broader plan, rather than being driven solely by the hope of being selected [to receive the funds],” Giovanni states.
Although the terms are often used interchangeably, “consortium” and “letter of credit” represent different stages of the process. A consortium is a collective self-financing system. A letter of credit, on the other hand, refers to the contractually defined amount made available to the participant after they are selected—subject to specific rules, the chosen category, and the documentation and collateral requirements set by the administrator.
“The consortium is the planning pathway. The letter of credit is the purchasing power that pathway provides,” the business owner explains.
Timeframes and urgency must be considered
This option may be suitable for individuals who can plan for the medium to long term, have an income that supports the installment payments, and do not rely on a specific, fixed date to acquire the asset.
This is because, in a consortium where the participant has not yet been selected, the release of funds occurs via lottery or bid during group meetings and depends on the availability of funds within the group. Therefore, there is no guarantee of immediate access to the credit. For those planning to upgrade their car, buy their first home, purchase a plot of land, or expand a business in the coming years, planning ahead can prevent making a decision only when the need has become urgent.
When the asset is needed immediately, the comparison changes. Financing, using one’s own funds, or utilizing a letter of credit that has already been awarded (contemplated) may be more suitable alternatives—though always after analyzing the conditions and costs involved.
“There is no single financial product that is ideal for everyone. The right question is which instrument to use, at what time, and in what proportion,” notes Giovanni Zarutti.
Real estate, vehicles, and productive assets
In the real estate sector, a letter of credit can be used—subject to contractual terms—to purchase ready-made homes or off-plan properties, acquire land, or fund construction and renovations.
This strategy can suit those looking for a first home, those intending to upgrade their property, or those wishing to structure the purchase of an asset to build wealth.
For vehicles, the logic also revolves around planning ahead. Individuals who know they will need to replace their car, as well as companies or professionals who rely on vehicles for work, can organize the purchase in advance rather than seeking credit only when an immediate need arises.
Regulations also allow for groups based on machinery and equipment, aircraft, watercraft, other movable assets, and certain services. This can serve business owners, producers, and professionals who need to acquire productive assets.
However, the use of the letter of credit must comply with the category and rules established in the contract. The funds cannot be treated as cash available for any purpose or as a generic working capital line.
Installment amount does not reveal the full cost
According to Giovanni, one of the most common mistakes is choosing a plan based solely on the monthly installment amount.
Before signing a contract, the consumer should evaluate the total credit amount, the term, the administration fee, any reserve fund or insurance charges, adjustment criteria, rules for draws and bids, cancellation and transfer conditions, and the collateral required after the credit is awarded. It is also important to verify that the administrator is authorized by the Central Bank, check the complaint history, and read the contract and regulations before making any payment.
Although a *consórcio* (consortium) does not charge interest in the same way a standard loan does, this does not mean there are no costs. Administration fees, price adjustments, and other stipulated charges must be factored into any comparison. Likewise, a lower monthly installment does not necessarily mean a lower total cost.
When this option might not be suitable
Giovanni advises caution when the installment payment places an excessive burden on income, when the client is heavily indebted, lacks basic financial organization, or enters the product relying on a promise of guaranteed selection (contemplation).
The lack of a financial reserve is another factor to consider. The method adopted by Zarutti Investimentos uses a reserve equivalent to at least three months of expenses—adjusted to each person’s financial reality—as a key benchmark.
“The goal is to build wealth, not to create a commitment that puts the budget at risk. Decisions driven by strategy must take the client’s actual profile into account,” he states.
Cash payment, financing, or a *consórcio* (group purchasing plan)?
Paying in cash can be advantageous when there is sufficient liquidity, the possibility of a discount, and the withdrawal of funds does not compromise the financial reserve.
Financing may suit urgent situations where the client needs to use the asset immediately and finds favorable credit terms.
A *consórcio* can be considered when there is monthly payment capacity, flexible terms, and a willingness to plan the purchase.
After the credit is awarded (contemplation), if it is not used immediately, the corresponding amount is separated from the common fund and earns investment returns until it is utilized. These returns should not be confused with the periodic adjustment of the credit value, which follows the index or indicator defined in the contract.
For Giovanni Zarutti, comparing alternatives before presenting a product is what turns a transaction into actual planning.
“The assessment must begin with the client’s financial situation, goals, and urgency. Only then should it move on to choosing between a *consórcio*, financing, or using one’s own funds,” he concludes.
About Zarutti Investimentos
Zarutti Investimentos is a credit solutions and wealth planning firm based in Campos do Jordão, serving clients across Brazil as well as Brazilians living abroad.
Founded by Giovanni Zarutti, the company deals with *consórcios*, letters of credit, already-awarded credit quotas, financing, and home equity loans, offering personalized analysis and support throughout the process.
