Joven family: What are Personal Loans?
Personal loans are types of loans, repayable through the payment of a fixed monthly amount, called installment. Personal loans are so called because it is not necessary to indicate the reason why they are requested, and the loans themselves are not tied to a particular asset, but may be required for the purchase of various types of assets, such as the car, motorcycles, medical expenses or simply liquidity. For this reason personal loans are unfinished loans. The fact that they are not connected to a specific good or service, which can serve as a guarantee in the event of the debtor’s insolvency, makes personal loans more risky in the eyes of credit institutions than dedicated loans. A further difference between the two types of loans also lies in the fact that personal loans are disbursed by bank transfer directly to the applicant’s current account, as there is no figure of the seller of the good or service, as is the case in the finalized loans. Personal loans are fixed rate loans, and for this reason the installment that is generally repaid monthly is constant for the entire period of amortization.
The interest rate
When evaluating quotes for personal loans, there are various components that you should consider, so that you can choose the best solution among the various proposals. The interest rate is undoubtedly one of the main components to be evaluated. With regard to the interest rate, within personal loan contracts we distinguish two items:
1. TAN: The nominal annual rate, is the interest rate, calculated as a percentage of the financed capital (in the installments following the first on the residual capital) referred to a year. If divided by 12 and added to the principal, it results in the monthly installment to be repaid.
2. APR: The annual percentage rate is the total cost of the loan transaction. The APR is therefore the sum of all the costs of the loan operation, therefore including any preliminary costs, insurance costs, brokerage costs.
In assessing the various offers, it is necessary not only to compare TANs and APRs, but also to take into account the duration of the loans. In fact the APR, comparing two loan quotes with the same financed capital, but with different durations, is lower for longer duration loans. On the other hand, comparing two loan quotes with the same duration, the APR is lower for loans with larger financed capital.
Dispute resolution and complaints
In order to resolve disputes between customers and financial intermediaries and banks, and to allow users to file complaints without having to go to court, Article 128-bis of the Consolidated Banking Act (TUB) envisaged the figure of the Arbitrator Financial Banking (ABF).
This out-of-court organization makes it possible to resolve disputes arising in financial matters between customers and credit institutions, or between clients and financial intermediaries, with enormous savings in time and money, as this avoids the need to resort to justice ordinary.