The payday loan is a customizable loan based on the needs of the applicant. The amount is repaid in monthly installments and can be issued in different financial forms and methods: employees and private individuals can apply for a fifth-party loan, while those who have already received more than one loan and want to pay it off can apply for a loan of consolidation.
What is a payday loan?
The payday loan is a type of loan granted to individuals by a bank or a financial institution without the need for the applicant to indicate the reason for the request. This type of loan differs from the finalized loan which is instead provided for a reason that must be declared at the time of the request.
The repayment of the sum takes place in an installment agreement within a set period
What requirements must I have to access a payday loan?
Normally, taking into account the directives and rules laid down by the Bank in Italy, the main requirements for accessing a payday loan are:
- Age between 18 and 70 years, with possible exceptions to be assessed during the preliminary investigation
- Demonstrable income (pay slip or tax return or pension slip)
- Residence in the Italian territory
In the event that the income is not provable, the personal guarantee of a third party (with verifiable and documentable reimbursement capacity) who undertakes to pay in the event of default by the applicant may be required.
What is the minimum and maximum duration of a payday loan?
The duration ranges from a minimum of 12 months to a maximum of 120 months.
Are there limits to the amount to be requested with a payday loan?
According to the discipline of consumer credit, the amount of a loan can be between € 154.94 and € 30,987.41.
In what situations is payday loan refused?
The main causes for which a loan is not granted are:
- the documentation submitted by the applicant reveals an insufficient ability to repay.
- the applicant is in a situation of over-indebtedness, or has other financing contracts in place which, together with the loan requested, would commit him over one third of his income.
- The applicant has suffered in the past protests and / or evidence of non-payments related to loans previously obtained (negative reporting by data banks on credit risks).
In order to assess the real repayment capacity of the applicant, the lender can access some private databases or the information system of the Bank in Italy (Central Credit Register).
According to the legislation in force before a requesting party is registered in one of these databases, he must be informed and must have granted his authorization.
In the event that the loan is not recognized, the institution that denied it must communicate the reason to the applicant, with particular reference to the negative information found in a database.
What information must a payday loan contract contain?
The most important mandatory information, written in the payday loan contract that you will need to check are the following
- indication of the sum and of the payment methods;
- interest rate applied;
- specific indication of the APR;
- any methods of changing the cost of the contract (costs and commissions);
- all costs to be incurred (preliminary costs and ancillary charges such as expenses for sending periodic reports, any insurance costs and costs relating to late payments);
- amount of installments and their maturity;
- any guarantees and insurance required.
Before signing the contract, it is a good rule to carefully check the contents, with particular reference to the APR
What is the APR?
The APR or Global Effective Annual Rate represents the actual cost of the loan that will have to be paid to the provider. This indicator is expressed in percentage terms and represents the cost including interest, costs and accessory charges. It is the most important indicator because it allows you to compare financing offers for the same amount and duration, therefore, when making the choice of payday loan, it is advisable not to be influenced by the convenience of other partial indicators such as the TAN – Nominal Annual Rate – which expresses the interest rate applied but does not include other expenses.
What happens if I don’t pay one or more installments?
In the event of delay or non-payment of one or more installments, there may be important effects such as the increase in interest due with the application of a late payment (additional interest) and the reporting of the loan holder to the credit protection bodies ( risk central, databases), which share information with the entire banking and financial system. This report compromises the credit standing of the customer and is communicated in advance by the funding body. In the event of not being able to pay even one installment, it is useful to immediately contact the dispenser to find alternative solutions.
Can you withdraw from the payday loan contract?
Yes. With the right of withdrawal, the customer has the right to change his mind and to terminate the loan agreement without the consent of the lender, without additional costs and without having to explain the reasons. The right must be exercised within 14 days from the conclusion of the contract, by sending a communication to the lender following the procedures indicated in the contract. If the loan has already started, even partially, the customer who withdraws must repay within 30 days capital, accrued interest and costs incurred by the bank as a stamp duty and / or substitute tax.