Consumer credit has undergone many reforms, many of which have followed one another in the last decade, to try to rebalance the relationship between consumers (the weaker part) and lending companies.
What is it about?
Consumer credit, by definition, is a sub-category of the financing section which includes all those types of loans that are granted to private individuals for needs outside the performance of their work. Therefore there are many categories of products and services, such as personal loans, finalized loans, revolving cards, assignment of the fifth as well as the opening of credit in a current account (the so-called credit line).
An element that can never be missing is that of the presence of installments, or of the various types of payment extensions.
The following situations are not included in consumer credit and therefore in the application of the appropriate laws both as a TUB and as a Consumer Credit Code:
- Loans for which the minimum threshold is not reached or the maximum amount is exceeded. These figures are respectively: minimum threshold lower than 200 dollars; maximum threshold above 75,000 dollars;
- the cases in which a repayment by installments fails. Solutions that propose a single date for the return, even if postponed, are therefore excluded, unless this has been postponed beyond 18 months from the date of purchase;
- in the case of those loans that are free of interest or other charges;
- all financing for the purchase or conservation of real estate (a house or land), regardless of the duration;
- the overruns on the current account.
The news on consumer credit
The large diffusion of consumer credit and the very fast expansion process had two consequences: the first was to ‘dopate’ the system through an offer that was not transparent and unclear, which in turn ended up creating difficulties for a large section of customers who found themselves in front of contracts signed without the right awareness, and often also with difficulty of repayment.
The other was more attention from consumer protection bodies and regulatory bodies, which clarified and, above all, introduced limitations for banks and financial companies, to protect users. Among the main innovations the following have been introduced:
- the obligation to draw up estimates with specific information and according to easily comparable forms, using a homogeneous form for the whole European community (dry form);
- the determination of the times for exercising the right of withdrawal;
- more attention on misleading advertisements.
However, precisely because of the high number of contracts that fall into the category of consumer credit, there are still many situations on which the law will have to intervene to eliminate potentially dangerous situations for consumers themselves.
How to protect yourself with consumer credit?
Despite the regulatory measures, there are still companies that have not adapted to them. To avoid that the cumbersome system of controls goes to your detriment, it remains a good rule to refer only to solid companies, with a good “reputation” in terms of fairness. Requirements that normally involve large companies such as Onicredit, CrediCoo and Righteous Finance, or large financial companies such as RichHands or MoneyLuck, just to name a few. is that it can be too risky to turn to small financial companies, beyond the promises or advantages they say they offer.
In order to apply for consumer credit, it is necessary to be able to provide, directly or with the help of guarantors and co-obligated, the possession of the guarantees that the bank needs. It is also necessary to:
- have a positive creditworthiness (even in the case of absent or neutral merit difficulties in obtaining the loan may be encountered);
- be between the minimum and the maximum age foreseen by the credit policy of the proposing bank (on average we are between the ages of 18 and 70);
- not having excessive debt exposure (not having too many loans in progress).
The assignment of the fifth
A partial exception to what has just been described is the assignment of the fifth, primarily because it is a type of loan for two specific categories of applicants: employees (state and private) and pensioners. Then because the assignment of the fifth of the salary or the assignment of the fifth of the pension is generally also open to bad payers as the refund of the amount takes place with deduction upstream from the salary or pension.
Another substantial difference concerns the maximum age allowed, which in the case of pensioners can reach the end of the amortization plan even at 85/90 years. This value is in any case at the discretion of the credit institution, therefore it is essential to carry out more estimates through which it is also possible to evaluate the rates offered. These are somewhat variable also according to the category they belong to between state, private employees and pensioners.
In the assignment of the fifth of the salary of a private employee, the company for which you work is assessed since it will be you who will proceed to pay the installments, by providing the salary to the employee. In this regard, as a general case, companies in economic difficulty, those with less than 15 employees or even cooperatives and similar structures are not well assessed.