The personal loan is a particular type of financing with very specific characteristics, which make it one of the most requested credit products by consumers. For this reason, we asked the experts of the SuperMoney online comparator, a platform on which you can find the best loan by comparing the best offers from the main banks, to summarize the main features that define personal loans in 3 points. Let’s go see them.
1. What are personal loans?
A personal loan is a form of financing through which you can request a sum in cash and, unlike the targeted loans, you can not declare what you need . In fact, they are not used to finance the purchase of a specific asset, for example a car or photovoltaic panels, but simply to have more liquidity.
Another special feature of personal loans is the risk of default . In fact, banks consider them more risky products than others because you are not required to present special guarantees . If in the loan with assignment of the fifth, a fixed part of your paycheck is intended to repay the loan, in the personal loan this possibility is not there. As there is no possibility to mortgage the house as a form of guarantee. Apart from these particularities, they work like all the other types of loans : they must be repaid through installments, which are increased by interest and accessory costs.
2. Who can apply for a personal loan?
These specific characteristics that make personal loans a separate product in the credit market also influence the categories of people who can apply for them. In fact, just because you don’t have to present special guarantees when you request it, banks want to be 100% sure of your working situation. This is why, the personal loan is generally addressed only to employees , hired under an open -ended contract .
Some banks may also, under special conditions, agree to provide a personal loan to an employee on a fixed-term contract . Under two conditions:
- the salary must be such as to guarantee a smooth return;
- the employment contract must not expire before the loan agreement ends.
If, on the other hand, you are a self-employed person , it is very difficult that you will be accepted a personal loan application. Obviously you should present the Unique models that you have compiled in recent years, so that the bank can check the solidity of your income, but it is also possible that you are asked to find someone willing to act as guarantor . A guarantor is a person who legally undertakes to pay the repayment installments for you, in case you have difficulty in doing so. This is an additional form of collateral with which banks try to hedge against the risk of default.
Finally, personal loans are practically off-limits products for those who in the past have been reported as bad payers , whatever their working situation today. A loan with assignment of the fifth is probably a better choice in that case.
3. Higher interest rates
By now you should have understood this: when it comes to personal loans, banks above all want to cover their shoulders and feel safe. Precisely for this reason, it is a product that has higher interest rates than other types of loans. In this way, the lender can repay the amount lent in less time, thus avoiding the risks associated with insolvency.
Interest is calculated mainly on the basis of the APR , the Annual Global Effective Rate. This is an index that includes, in addition to the sum to be repaid, also the actual interest, the spread (i.e. the amount of pure bank profit), the accessory costs and the premium of any credit insurance. On average, the TAE G of a personal loan stands at around 11-12% .
When you are in front of the APR of a loan, always remember to compare it with the TEGM (Average Global Effective Rate), an index defined quarterly by the Capital Lender that indicates the limit of bank usury .