The personal bank loan
Definition and characteristics
Personal loan is an installment loan that falls into the category of unsecured loans, generally of a medium-high amount, which can be used freely by the applicant (excluding business purposes). However, although there is no connection between the sum loaned and the good or service that you intend to purchase, the banking practice is to investigate the actual use of the money, therefore, in the preliminary investigation phase the consultant could informally request the purpose of the loan.
The personal loan is governed by the consumer credit legislation and, differently from the finalized loan, provides for the payment of the sum of money (in the form of a bank draft or bank transfer) directly into the hands of the consumer customer.
Who can request it?
According to consumer credit legislation, personal loans are reserved for consumers. Therefore, it cannot be granted to companies or people who intend to finance their activity.
Maximum amount obtainable and duration
The consumer credit regulation provides for an amount between $ 154.94 and $ 30,987.41. Generally, in the case of personal loans in the strict sense, the amount is medium-high, while for smaller amounts it is preferred to use the form of revolving credit: revolving credit cards or opening of revolving credit lines (same mechanism as revolving cards but without the plastic support).
The duration is between 12 and 120 months.
To calculate the maximum obtainable installment and display the ideal financing, you can also use online calculators.
Amortization and early repayment plan
The amortization plan mostly used by banks and financial institutions is the “French” one, that is, constant installments composed of an increasing capital share and a decreasing interest rate . This plan allows banks to collect a greater total interest than an “Italian” or “German” plan, thanks to the slower repayment of the capital.
In addition, even in the event of early repayment, the loan guarantees a higher interest, precisely because most of the interest is paid in the first repayment period.
Hence the impropriety to pay off a loan towards the end of the amortization plan.
Generally, the personal loan has a fixed rate expressed by the Tan. (nominal annual rate) and by the Taeg. (annual percentage rate). The latter is a valid indicator to compare more loans for the same amount and duration.
Personal loan guarantees
The personal loan does not provide for the provision of real guarantees such as the mortgage. The only tools that financial companies can use to protect themselves in cases of potential insolvency risk (such as, for example, very high amounts, fixed-term employment contracts or projects) are:
- Personal guarantees : signature of a co-obligor or third guarantor who is directly bound to the financial company in the event of insolvency of the principal debtor.
- Credit insurance : life or employment policies, with which the financial companies guarantee the repayment of the capital in the event of the debtor’s insolvency due to premature death, temporary or permanent disability, loss of job (see Loan insurance ).
Pay attention to the guarantor signature!
We often tend to grant the guarantee signature too easily to a relative or friend. It is good to consider that in the event of insolvency, if the debt of the relative or friend is not repaid in a timely manner, it is reported in the databases, thus compromising the possibility of obtaining other loans.
Furthermore, it must be emphasized that the financial commitment deriving from the guarantee signature also affects the evaluation of a subsequent financing practice that should be used by the guarantor. Therefore, the possibility of obtaining a loan or a larger amount could be compromised.
Who can grant the personal loan?
The personal loan can be paid directly from:
- Financial intermediaries registered in the special register held at the UIC (Italian Exchange Office)
The customer, therefore, to sign a personal loan contract, can go directly to a bank / finance desk or use the websites of banks and companies authorized to grant loans online.
Online personal loan
To sign a personal loan contract, today, it is also possible to use websites of banks and companies authorized to grant loans online.
Very often in this way it is possible to reduce some costs (intermediation, preliminary investigation, etc.) and obtain better conditions also in terms of the interest rate applied. In fact, these sites allow you to compare multiple financing proposals sorted by increasing Taeg.
Another phenomenon linked to the world of online loans is the so-called “social lending”, that is, the loan between private individuals. Applicant and bidder meet through a common platform that definitively replaces the intervention of a bank or a financial one: the most known site is undoubtedly Zopa.
Beware of online information requests!
Generally, websites that offer online loans also allow you to make online quotes before submitting the actual request. It is good to pay the utmost attention to the data you provide to make this estimate. In fact, if the form also requires the inclusion of the tax code, most likely your name will end up in the database, that is, the entire banking system will be aware that a loan request has been submitted. Therefore, if you want to give up that loan or contact another operator, you should request a release letter and lose precious time (at least 1 month).