Personal loans – Loans

Personal loans are a special category of loans that do not have a very specific purpose. They may be required to source any kind of need. They are distinguished from the finalized loans which, on the contrary, are required to make the purchase of a specific good or service. Personal loans, therefore, can be requested to carry out any type of expense: from a gift, to holidays to medical expenses or to expenses for wellness and for particular ceremonies. Once the loan, the bank or other credit institution is accepted, it delivers the capital directly to the client.

Personal loans: the guarantees required by the bank

Personal loans: the guarantees required by the bank

Credit institutions and banks, before granting a personal loan, require a series of guarantees necessary to protect themselves from the risk of customer insolvency. The most important and common guarantees required by banks are:

  • a certain and provable income;
  • creditworthiness;

Furthermore, some banks may also require the installments to be repurchased: this is an additional guarantee that protects the provider from the risk of insolvency.
Furthermore, if the applicant has a recent seniority or if he asks for a very high amount, the bank could also request the signature of a third guarantor or a guarantor who undertakes to return the sum in the event that the applicant defaults.

Personal finance: interest rates

Personal finance: interest rates

In order to calculate the total cost of personal loans, the TAN and the APR are the two indicators to consider. They indicate the total expenditure that the applicant will have to bear during the course of the loan. In particular:

– TAN (Nominal Annual Rate) is the pure interest rate that is applied to the capital obtained with the loan. It is expressed as a percentage and does not include any incidental expenses that the applicant must incur during the loan. The Tan calculates the amount of interest that the applicant must pay to the bank or credit institution. In particular, the Tan is calculated based on the value of the amount financed and based on the duration of the loan. Tan, alone, is not enough to calculate the amount of underground financing.

– TAEG (Global Effective Annual Rate) is a much more complete indicator than the TAN as it provides the applicant with the total cost of the loan. It includes all the ancillary costs (such as, for example, the preliminary or insurance costs) that the applicant will have to bear during the course of the personal loan. Expenditure on government stamp duty, default interest, non-compulsory insurance and notary fees are excluded from the calculation of the APR.

It ‘important to note that the lenders have discretion in determining the APR. The law allows them to decide to include or exclude from the calculation of their expenses rather than some other.

Personal loans: What happens in case of non-payment of installments?

Personal loans: What happens in case of non-payment of installments?

In the event that the applicant is unable to pay the monthly installments and, therefore, in the event that he becomes in default, there are some very important consequences. First, the interest you pay will be increased and will be charged a late payment. The debtor’s name will also be entered in the list of bad payers and will be reported to the bodies that protect the credit.

This is a very important consequence since all the data of bad payers are shared on the financial and banking system: in this way, the debtor will have difficulty in obtaining credit.
Furthermore, in the event of default, the bank may decide to terminate the personal loan contract unilaterally. Here too the consequences are relevant:

  • the debtor will lose the personal loan;
  • will have to pay the expenses of protest and bank;
  • must also pay any penalty.

Personal loans: contract requirements

The law provides that the personal loan contract contains a series of elements and indications. In particular, the contract must contain:

  • indication of the interest rate applied;
  • the number, the amount and maturity of the installments;
  • the methods by which the loan is granted;
  • the APR;
  • expenditure not included in the calculation of the APR;
  • any other condition or price applied in the loan;
  • insurance coverage not included in the APR;

Personal loans can also be repaid early. In this case, the applicant will only have to pay the remaining capital. In some cases it is possible to apply a penalty for early termination established and required by law.

Delay in the payment of a loan: consequences

If you have obtained a loan, it is obviously desirable that you have previously made all the calculations necessary to repay it within the agreed time frame. Prevention is always better than cure, said an old advertisement.

Obtain a loan

Obtain a loan

To prevent inconveniences, it is always advisable to check that the repayment installment has been paid even if you have chosen the direct debit on the current account, because there could be payments that failed for reasons independent of the debtor, but in each If they will fall back into the same consequences as those who did not pay.

In any case , if, due to difficulties, you should not be able to pay the installment for a loan momentarily, what would happen?

The first consequence , the most “painless”, is the increase in interest that generates higher costs of the installment ( so-called “blackberry” ). Later, an important risk is to be reported to the CRIF (Central financial risks) as a bad payer. This is an important consequence because it could prevent you from further access to loans for some time. The “black list” of non-paying debtors, in fact, can be consulted by any credit institution and is indeed a practice that every credit institution performs before granting a loan to a customer.

Ultimately, if the payment delay becomes excessively delayed in time, the lender can decide at any time to unilaterally terminate the contract, acting through the courts and demanding repayment forced it should be, comprehensively the costs incurred in doing so.

Even if the delay turns into a non-payment, reporting to the CRIF cannot in any case be more than 36 months, this means that after three years you will still be able to request funding without fearing for the previous report .

500 USD Loan

500 USD Loan

If a delay of up to two installments is remedied, you remain on the list of bad payers for 12 months, while delays from the three installments upwards, even if they are remedied, make the subject remain on the list of bad payers for 24 months. 12, 24, 36 months you wish to leave From the moment of balance or expiration or termination of the contract.

It is good to keep in mind that, depending on the monthly date in which each credit institution sends its reports to the CRIF, it can happen to be reported as bad payers even if the payment delay is only one day! If, for example, you have an installment due on the 15th of the month and the bank sends the reports to the CRIF every 16th of the month, you may find yourself reported even for a single day of delay.

On the contrary, you may be luckier if the installment expires on the 16th with the sending of reports on the 16th, in this case the report would leave only after thirty days.

That’s why you may find yourself with even reported a few days late. So: a loan is not like the electricity bill! If you’re unlucky, the delay of even one day can have major consequences. To this should be on time and constantly check that the payment was made in the case of payment RID.

What is the guarantor loan – the Loans

The guarantor financing is a particular type of financing for which a creditor institution grants a loan to another subject thanks to the presence of a third figure, the guarantor, who is fully responsible for the loan and that is committed to covering any missing payments of the person that follows it.

The guarantee is officially certified during the signing of the loan contract by the guarantor’s signature, which then becomes tied up as the beneficiary of the loan. In the event that the latter does not want to be able to pay the loan reimbursement for which reason, the guarantor who has taken responsibility for it must pay the debt.

Credit institution

Credit institution

The credit institution will thus be able to make claims at its discretion not only on the debtor, but also on the guarantor, and also it will have to proceed with the payment under penalty of all the negative consequences typical of situations of non-reimbursement such as payment intimations, foreclosures, registrations in the register of bad payers and so on.

Since the payment by the guarantor would affect his financial situation, it is not automatic that the institution accepts any subject as guarantor, but will first verify the financial soundness of the Central Risks and its sources of income. This is why the guarantor must be able to demonstrate, through banking systems or through a tax return, that he has an adequate income or a stable job or property, in any case of the elements for which the financial company may, in the event of the debtor’s failure to pay, claim repayment on he.

The acceptance or otherwise of a subject as guarantor, therefore, depends substantially on how much the latter could guarantee the extinction of the debt and may or may not be granted depending on the extent of the financing made, so it varies from situation to situation.

Dollar safe – 500 USD

Dollar safe - 500 USD

For example, if the payment of a used 5000 euro car is to be guaranteed and the guarantor has a one thousand euro contract per month for two years, it is very likely to be accepted. The same subject, in the absence of other present income or property, could hardly be accepted as guarantor of a loan for a twenty-year loan. Furthermore, the guarantor cannot be included in the list of Bad Payers of the Central Risk to the borrower.

The first aspect that a guarantor should worry about, however, is that the installments are paid extremely correctly by the debtor, otherwise the payment will “rise” towards him. If for some reason this hypothesis should occur, the guarantor may still proceed to retaliate against the principal debtor, as stated in the Civil Code in the articles from 1950 to 1952 and in article 2871.

The guarantor is not a mandatory role in the financial operations of any kind. However, you can propose it to the credit institution to make it easier for you to accept a loan or, conversely, it may be the credit institution that requests it if it is not safe enough to be free of risk.