What is the collateralized loan? What guarantees will be requested at the time of the request? How much do they cost? How can you best manage this type of financing?
In this article updated to 2019 we will answer all these questions!
Loan with paycheck guarantee
Obviously, since your task after the loan is to repay the monthly installments on time, the first and main guarantee that you will be asked for will be the testimony of your regular income. And that is:
- The paycheck if you are an employee
- Your last tax return if you are self-employed
- The pension if you are a pensioner
However, there are ancillary guarantees, but these that we have just listed are the fundamental guarantees, as they are based on your creditworthiness, that is, on your availability of regular monthly income, which will allow you to pay the installments.
The ancillary guarantees that we will see are very useful to “convince” the bank that you will be a good payer, and therefore speed up the process of approval and disbursement of the loan itself.
In short, paychecks or pensions are the most important guarantees.
With just the paycheck or pension, you can apply for a loan with the assignment of the fifth, which is the easiest form of financing to obtain if you meet certain conditions.
Loan with assignment of the fifth
It is a form of financing that is becoming increasingly common in Italy: it is the so-called transfer of the fifth.
We talked about it in depth in several articles.
The concept is very simple. If you are an employee or a pensioner, all you need to do is guarantee your paycheck or your pension certificate to secure a fifth of your net salary (or pension), which will be directly withheld and used to repay the installments of the loan.
The advantages of the loan with assignment of the fifth are many and attractive:
- These loans are very quick to obtain (the procedures are computerized and there is no longer any need to contact the employer or INPS directly)
- The conditions are generally good
- The refund takes place automatically
- With the renewal of the fifth, you can renegotiate your assignment to obtain more advantageous conditions over time compared to when you entered into the first loan contract.
On the other hand, the loan with assignment of the fifth has costs. In addition to the normal bank management costs, in fact, you will be asked to take out insurance policies (one on life and one on loss of employment) for the duration of the repayment.
However, don’t worry: in case of renewal or renegotiation, these costs can be refunded to you.
Alternative guarantees for loans
It is possible to obtain a loan with alternative guarantees.
In case you do not have a paycheck or a pension, but obviously you find yourself having to testify that you will be a good payer, able to observe the monthly payments foreseen by your financing, you can use alternative guarantees to obtain the loan.
These are therefore guarantees that replace or supplement the income.
Loan with guarantor guarantee
If you have a low credit rating, the bank will surely ask you to find a person who guarantees for you: a guarantor, namely the guarantor. Whether you are a parent, a friend or an acquaintance, they will become responsible for paying the debt if you are unable, for any reason, to pay the installments correctly.
As is evident, the guarantor must be a person recognized positively by the bank, that is, with the financial possibilities to intervene in the payment.
The guarantee with guarantor has no additional costs, while for the guarantor there is only the moral and financial commitment.
Loan with securities guarantee
A not very common situation is that of the debtor who does not have a job, but is in possession of a securities deposit containing shares, bonds, mutual funds or other financial instruments.
In this case, the bank could grant the loan in exchange for the guarantee of the securities deposit.
A sufficient part would be guaranteed to cover the loan granted in whole or in part.
The loan with securities guarantee also has no additional costs, but you must remember that the financial instruments that you will guarantee will not be available until the loan is extinguished, or until the bank allows you to use it.
Loan with guarantee of a property
It’s the mortgage. It represents a form of “real” guarantee, as you must have the availability of a property to be mortgaged. Loan with collateral for a property is a practice generally reserved for loans with large amounts. It has variable costs, which depend on the fee of the notary who will deal with contracts and documentation.
Banks appreciate this type of guarantee, first of all because they are “strong” guarantees, and secondly because their value increases if they are of the first degree (ie if there are no other creditors to claim mortgage rights on the property)
There are three types of home mortgage loan :
- Mortgage loan : you take out a mortgage on the house as a guarantee, and the repayment ranges from 5 to 25 years
- Home mortgage : also granted to bad payers, it allows you to customize the payment in installments
- Mortgage liquidity : provides for a maximum capital equal to the value of the mortgaged property, and allows the provision of loans up to $ 75,000
The mortgage loan is suitable for those who need a medium-sized credit, given that the value of the property must be equal to or greater than the amount requested, and therefore in general those who own a property almost always meet this condition.
Loan with youth guarantee
If you are young and you need liquidity – to study, or to open your own business – you can think of applying for a loan.
Don’t have a paycheck?
It may not be a problem, as there is a possibility that your bank will participate in one of the national, regional or municipal initiatives to provide honor loans.
Here it is not creditworthiness that is the needle of the balance, but a kind of “moral” and “economic” credit.
On a practical level, in these cases it is the State, the Regions or the Municipalities which guarantee the debtor.
By applying for a loan with a youth guarantee, you can have the liquidity you need now, but can easily return it over time.
Loans with guarantee bills
Changed loans are also part of loans with alternative collateral.
Loans with bills of exchange are granted in exchange for the subscription of bills of exchange, debt securities to order and immediately executive. For the bank or finance company, these securities are “stronger” than the normal debit on the current account of the repayments of the monthly installments.
The repayment of the monthly installment in fact takes place through the payment of the relative bill.
What happens if you don’t pay the loan bill?
If you do not pay the bills of exchange, the bank will be able to take recourse directly to you, without going through judicial dies.
Loans exchanged are more expensive than other forms of financing, but they can also be requested if you have had some problems with the repayment of previous loans, or if you have suffered protests and your situation in Centrale Rischi is not exactly idyllic.