How are loans secured?
Guarantees Personal loan – finalized loan
The personal loan or the finalized loan, differently from the loan, does not provide for the provision of real guarantees (pledge or mortgage) for which, in some cases (ex: fixed-term employment contract, high amount etc.) the financing bodies they may request personal guarantees: the signature of a co-obligor or a third guarantor who are directly bound to the creditor (bank or financial) in the event of the insolvency of the principal debtor.
The bills: personal but with executive character
As a form of very strong guarantee we may find the bill of exchange, which is one of the personal ones. If duly completed and following payment of the stamp duty, in addition to the other personal guarantees, it has the character of an enforceable title. This can be used to assist both personal and targeted loans. It is also practically always used for loans between private individuals, also accessible to bad payers and protesters.
What is the “guarantee” of the asset purchased with financing?
Additional personal guarantees may also be requested in the case of a finalized loan, despite the fact that the lending company has the opportunity to make claims on the asset. Why does it happen? Because any asset of value X at the time of purchase, once it is transferred (in the case of a car loan, also of the property), will have an XN value.
Over time the loan will increase the interest to be repaid, while the asset will continue to lose value. So the only way to protect oneself for the recovery of the sum financed plus the one due as interest lies in attacking the income of the co-obligors and the guarantors, while the good object of the guarantees will have an “accessory” function. This argument is not only valid in the case of a pawn loan, which has a completely different functioning.
Do banks and financial institutions have the right to ask for additional forms of loan guarantee?
Anyone who carries out the function of “lender” assumes the risk of total or partial “insolvency” of the financed amount. In fact, if the debtor does not have to pay, the lender will have to use, at his own expense, to activate the procedures necessary to solicit non-payment, up to the injunction, attachment, etc. Therefore it is his right to protect himself in the way he considers most solid. Therefore, in any case, the lender has a certain discretion in establishing from time to time – based on the risk profile of the transaction and the credit history of the customer – any guarantee to be requested.
It matters little whether this is a small loan, an online loan, etc.
Young people, pensioners, temporary workers: what benefits?
The age required to access funding starts at 18, so there are no special restrictions for young people. However, for a category that does not yet have a solid credit reputation, even a fair income can lead to the request of co-debtors or guarantors. A problem that may not be encountered in small loans, in the majority of online loans, and for some forms of subsidized financing where forms of guarantee are used that are not direct, neither personal nor real (we have the best example with the loan of honor and microcredit).
For pensioners, on the other hand, if the credit reputation is good, the only limit is the maximum age of access to financing, which varies from bank to bank. In these cases we must look at the offer of banks and financial institutions that have a higher maximum age. If you are too old in age, you can make the loan payable to those who are younger (for example the spouse even without income) and act as guarantor. For temporary workers the presence of a guarantor becomes mandatory, except in the case where specific insurance policies are provided. But in these cases the financing becomes more expensive, due to the risk assumed by the insurance that offers its own guarantees.
Guarantees Assignment of one fifth of the salary
The assignment of the fifth is a guaranteed loan but, unlike the loan, does not provide for the provision of collateral (pledge or mortgage); the main guarantee is represented by the income from employment, in fact the installments are withheld directly from the pay slip. In addition to the stability of the workplace, in the event of insolvency, the funding body will be able to count on the TFR (Employee Severance Indemnity) accrued by the employee and on the obligatory stipulation of two insurance policies (life risk and employment risk) that will go to remedy. the debt if the TFR is not sufficient.
However, salary-backed products were also created for temporary employees and, for public ones, there is also the form of the sale of the fifth no Tfr . This is because the “public” salary and the intervention of the public administration constitute a high level of protection.
Banks or financial institutions can request, as a guarantee for the credit granted, the stipulation of one or more insurance policies: these are life or employment policies, with which the lender ensures the repayment of capital in the event of insolvency due to premature death, temporary disability or permanent loss of employment.
Alongside compulsory policies, the financial institutions can “propose” optional policies (civil liability, health insurance, etc.) which, although not included in the calculation of the APR, contribute to increasing the total cost of a loan!
Consider, in fact, that even a very expensive policy can result in a slight increase in the installment, if this cost is distributed over several years: for example. a policy of $ 300 “spread” in 60 months involves an increase in the installment of only $ 5 … a $ 600 in 84 months determines an increase of about $ 7!
Whether or not it is convenient to take out this type of policy always depends on personal evaluations. Surely, if the main income bearer of a family is to apply for the loan, entering into this coverage involves an act of responsibility, beyond the extra cost to be incurred. There is also to consider that the single premium insurance paid in advance are those that cost less and that, as a result of regulatory changes, premiums paid and not taken should be reimbursed by the insurance company.
Here too, however, care must be taken: in most cases, a specific request for repayment must be made . In fact, few companies act without solicitation.