To try to deal with this in- depth on our loans with due awareness, let’s start with a small step back and let’s take a look at what the bills are.
What is the bill of exchange
The promissory note, one of the main protagonists of the loan, is a credit instrument with which the parties undertake or commit themselves to reciprocal services. In other words, through the promissory note, it is promised or ordered the payment of a specific amount indicated in the credit title, on a future date, and in a predetermined place. It is therefore a means of credit that serves to postpone the monetary service, and that can be issued to postpone later the regulation of a service (for example, the sale of a product), or the extinction of a financial debt (as happens precisely in the case of loan changes).
In more concrete terms, on the basis of the currency law (ie, the Royal Decree of December 14, 1933, No. 1669), it is possible to distinguish two different types of bills:
- trafficking, which is a title of credit to the order in which a subject (trustee) orders a second subject (drawee) to pay a certain sum to a specific third party (borrower or beneficiary, possibly coinciding with the trader);
- the promissory note, which is a credit note to the order in which a subject (issuer) promises the payment of a sum of money to a second subject (borrower or beneficiary).
We also remind you that in order to be “in order” with enforceability, a stamp duty must be applied to the bill, which will allow direct advancement of the expropriation / enforcement procedure, in order to obtain payment of the amount indicated in the bill.
How do loans work in exchange
With the introduction of the above, it is easier to understand the characteristics of the loan changes. With the disbursement of a loan, the bank or the financial company will grant an amount of money, making the debtor sign a series of bills (as mentioned, mainly on a monthly basis), with payment of which will be gradually extinguished of the repayment schedule, and the related debt.
Therefore, the operation provides:
- Request for funding from the debtor , with simultaneous delivery of the necessary documentation to be able to proceed with the preliminary investigation by the lending credit institution (pay slips, income tax returns, documents in the process of being identified, any supporting documents for expenses, and so on) ).
- Analysis of the creditworthiness examination by the credit institution , and consequent positive resolution and communication to the future debtor in the event of acceptance of the request.
- Signing of the commitment to pay bills , and preparation of credit instruments with application of stamp duty, in the measures provided for by the law in force.
- Disbursement of the requested capital , with crediting to the debtor’s current account or with a promissory note / bank transfer.
- Restitution of the debt , respecting the amortization plan indicated by the payment of bills of exchange, generally on a monthly basis.
What are personal loans as a guarantee
Loans can not be confused with personal loans as a guarantee, which are personal loans whose main guarantee will be the preparation of a series of bills that will only serve as a liquidation effect with a fixed maturity.
In other words, personal loans as a guarantee are personal loans in all respects, to which it is given – as an accessory guarantee – an effect that allows for a faster recovery of the debt in the event of insolvency on the part of of the subject who should have punctually fulfilled his obligation.
What are the advantages of loan changes
There are numerous advantages that can be placed on loans made by those who resort to this form of debt, albeit in partial disuse with respect to other forms of financing. Among the main ones, we can certainly remember the fact that the loans issued for the guarantee they present can also be granted to subjects who have had previous problems in terms of complying with the amortization plans of other past loans (it is nevertheless very difficult for a loan can be disbursed against protested subjects).
Again, it can be recalled that the loans repurchased are generally less expensive loans than other forms of credit (such as salary-backed loans ), with lenders that are generally more inclined to grant discounts on the rate by virtue of the greater guarantee of repayment in the event of default.
Furthermore, the finalized loans can grant numerous advantages in terms of modification of the repayment program: it is in fact possible to enjoy greater flexibility in payments, with the possibility of renewing bills of exchange in the event of sudden and temporary difficulties in the repayment of the capital, and so on .
What are the disadvantages of loan changes
Having said that, it is also true that the loans repurchased are not without negative points, although certainly not such as to jeopardize access to this form of financing.
First of all, we must remember the presence of the “inconvenience” linked to the existence of the bill of exchange, a title of credit that must be paid in pre-established places and times (generally, in a bank chosen by the lending bank). Secondly, the fact that by not paying the bill, there is the risk of quickly executing an executive action, with consequent rather significant prejudices, even in the short term.
Thirdly, it should be remembered that the loans issued are rather complex loans to be requested and to be formalized (compared, at least, to other forms of personal loan), and that although they have lower cost conditions than those of other forms of financing, are certainly not among the most convenient forms of technical loan in the credit world.
Finally, in addition to the aforementioned, we also recall that the loan credits are not available in all banks and in all financial institutions, and that therefore it may be difficult to try to identify the funding institution of greater proximity and reference.