CHARACTERISTICS OF THE LOAN FOR PAYDAY LOAN
The offer of loans for payday loan consolidation present on Charles Darnay.it is quite similar to that of personal loans with the only difference that you can find products with specific prices and / or conditions reserved for loans for this particular purpose. Therefore, for the general characteristics, we refer to the personal loans section. The peculiar characteristic of the loan for debt consolidation is that it serves precisely to consolidate multiple debts in a single loan and, if possible, to obtain additional liquidity: the process of preliminary investigation and evaluation of the feasibility of the operation is therefore rather complex as it is it is necessary to obtain the documentation of the loans to be extinguished, in particular the related extinguishing statements, which are the documents that attest to what must be paid to the financial institution that is extinguished to free the applicant from the obligations towards him (the extinctive calculations allow to calculate the amount to be extinguished for each loan taken out).
Generally, the granting of a loan for payday loan consolidation is not subject to the presentation of real guarantees (or pledge or mortgage rights on assets owned by the applicant). However, in some cases, in order to limit the risk of insolvency, the financial institutions submit to the applicant a contract that provides for the repayment of installments, or a single bill, able to guarantee a part or the entire amount disbursed . However, the most widespread form of guarantee is the signature of a co-obligor or a third guarantor, who acts as guarantor of the success of the transaction. This is a rather common request, in the presence of special conditions (such as an applicant with a recent length of service or with a particularly large amount of the consolidation loan or some small payment problem with the loans it intends to consolidate). In any case, it is not possible to establish rules that are valid a priori since the possible request for guarantees is at the discretion of the individual Institute, which decides on a case-by-case basis, depending on the risk profile of the transaction and the individual applicant.
THE ELEMENTS OF THE CONTRACT
The law establishes that a car loan contract must contain the following elements:
- the data and contacts of the lender and the credit intermediary (if present)
- the interest rate charged;
- any other price and conditions applied, including the higher charges in the event of default;
- the amount and methods of financing;
- the number, amounts and expiry of the individual installments;
- the annual percentage rate of charge (APR);
- the detail of the analytical conditions according to which the APR can possibly be modified;
- the amount and purpose of the charges that are excluded from the APR calculation;
- any guarantees required;
- any optional insurance coverage not included in the APR calculation.
NON-PAYMENT OF AN INSTALLMENT
The interruption of the repayment of the loan entails the immediate non-fulfillment of the financing institution and the risk of unpleasant consequences:
- the interest due would be increased, with the application of a default;
- there is a risk that your name will be included in the list of latecomers and / or reported to credit protection bodies (the Central Risks), which will share information with the entire banking and financial system. The result will be a worsening of the customer’s creditworthiness and a consequent greater difficulty in obtaining credit in the future.
Failure to timely pay even a single installment authorizes the lending institution to unilaterally terminate the contract. The customer will be required to pay all bank and protest charges as well as all the costs incurred by the Institute to recover the sums due, in addition to a possible penalty.
The law establishes that it is always possible to extinguish the loan early with respect to the agreed term. The customer who chooses to exercise this option will be required to repay the outstanding capital, plus a penalty which, by law, cannot exceed 1% of the amount financed. If the contract does not specify the amount of residual capital after each repayment installment, the sum of the present value of all installments not yet due on the date of early repayment shall be understood as residual capital.
Below we illustrate in a schematic way some specific evaluation criteria of the loan for payday loan consolidation.
- Risk policies Each Institute applies its own risk policy in the assessment of requests, based on the statistical data it has (credit scoring). This data is the tool that allows the Institute to keep insolvencies below a certain level.
- Income level The acceptance of the requests is normally also subordinated to the evaluation of the income level of the applicant and to the relationship between the latter and the possible repayment installment (considering also the eventual installments of other loans that the applicant should not pay off with the loan for consolidation).
- Creditworthiness The creditworthiness of the applicant is of great importance. It is important to emphasize that this evaluation has no “moral” meaning. The Institutes are limited to estimating the level of risk associated with each request, also based on the credit reports provided by the Central Risks. If the credit history of the applicant has some “flaws” (delays in repayments of previous loans, unpaid debts, etc.) the probability of the request being accepted is obviously lower. In some of these cases a valid alternative is constituted by the Assignment of the fifth, a solution which, by offering the appropriate guarantees to the financing institution, allows the adoption of more flexible evaluation criteria.
When choosing between multiple financing offers, it is good to consider the overall burden of each one, without limiting yourself to evaluating the monthly installment only. However, this is sometimes not an easy operation, as there may be a large number of financing items (amount paid, interest, ancillary charges, initial costs, insurance costs) and cannot be easily measured immediately. In general, the elements that should be considered before signing a loan agreement are:
- TAN (Nominal Annual Rate)
The TAN represents the interest rate, expressed as a percentage and on an annual basis, applied to the financed capital (sometimes including any insurance costs or preliminary investigation costs). It is used to calculate, starting from the amount financed and the duration of the loan, the portion of interest that will be paid to the lending institution and which, added to the capital share, will determine the repayment installment.
- APR (Global Effective Annual Rate)
The APR is a measure, expressed in percentage terms, with two decimal places and on an annual basis, of the total cost of the loan. Unlike the TAN, the APR is inclusive of any additional charges, such as investigation costs and insurance costs, which are charged to the customer. However, under certain conditions, the Italian legislation allows a certain discretion, excluding or including some items in the calculation of the APR: insurance costs, for example, if optional, can be excluded from the calculation. Pay attention and carefully consider your overall expenditure, analyzing each single item of the offer that is proposed to you.