Loan with promissory notes: 3 tips to reduce the rate.

Although not widely used in Italy, the changed loans can be really useful in some specific circumstances, since they allow those who do not have certain requirements (such as those without a paycheck, fixed-term or atypical contracts, unprovable income, without guarantors) to be able to take advantage of a credit in case of unexpected expenses or needs.

This also applies to those who have been protested or are bad payers, subjects who would hardly have access to other forms of credit otherwise. Loans promoted to protesters and, in general, to “atypical” workers (such as self-employed workers, project workers, etc.) are settled through bills of exchange and can be made not only by private individuals but also by banks or financial companies (see also Loan d ‘honor). However, care should be taken to avoid the risk of incurring too high rates. Here are some tips on how to do it.

Do not accept any conditions, but choose wisely

Do not accept any conditions, but choose wisely

An emergency or a sudden need for liquidity could lead the applicant to accept any interest rate conditions from the banks. Loans exchanged with protesters, in fact, do not have a similar interest rate for each issuer, but each bank can decide on its own.
It would be good, therefore, before applying for a loan, to inquire carefully (even in the case of online proposals, especially if they are very interesting in terms, to avoid bad surprises) and then choose the bank or financial institution with the most advantageous interest rate.

Motivate the loan

Motivate the loan

One of the characteristics of the changeable loans is that of not being finalized, that is, of not requiring motivation from the applicant. If on the one hand this proves positive from the point of view of privacy, especially in loans changed to protested and bad payers, on the other it entails the payment of a higher interest rate. Put simply, it is as if the bank implied a compromise: “I am not asking you for the reason for the loan, but in return you pay me a higher rate”.

If the loan is motivated, the interest rate, on the other hand, sometimes drops considerably. If, for example, you need to buy a car with bills of exchange, you must specify in a contract proposed by the dealer the good or object of the purchase (“car”) together with its specific purpose (for example: “use staff “). Once this is done, you must sign the form and issue your identity card number and tax code (even in this case, no other requirements are required). Since the procedure is very simple, it is preferable, therefore, to think about it.

If you have a guarantor available, better present it

If you have a guarantor available, better present it

To obtain a loan from a bank with a promised loan, it is not necessary to present a guarantor, but even the signature of the applicant alone (single signature) may suffice. Provided that it is known that in this way the interest rates on the credit granted will rise.

To bring them back to at least ordinary levels, it would be appropriate to present a person similar to the figure of the guarantor. If the latter then has a very solid economic situation even better: the bank will be able to stay safe and the interest rate for the loan will be revised downwards.


Responsible credit – to prevent over-indebtedness

As part of prevention and transparency towards credit recipients, the ASBCEF (Swiss Association of Credit Banks and Financing Institutions) wishes to make customers aware of the consequences of their commitment. The goal is also to frame the reasonable limits of a loan, and leave a margin of safety in the event of an unexpected event.

Consequently, since January 2016, the member institutions of the ASBCEF must systematically deliver an information note to consumers of credits, which describes the context of the contract and the possible solutions.

What characterizes the granting of responsible credits

Switzerland is one of the most severe European consumer credit countries. One of the objectives of the Federal Consumer Credit Act (LCC) and self-regulation agreements is to protect the customer from the risk of over-indebtedness. Thus, the member institutes of ASBCEF carry out an in-depth study of each client, as well as a scrupulous control of their profile, in order to propose tailor-made solutions and appropriate advice, since each situation is unique.

Analyze case-by-case practices

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The main element for a credit recipient is the eligibility of the credit. Indeed, the borrowed amount must necessarily be within the customer’s financial capacity. For this purpose, it is necessary to know the customer’s overall situation, that is his income but also his expenses. Thus, the member institutions of the ASBCEF systematically analyze the global financial situation of the credit recipient and a personalized risk profile is created for each customer so that the request can be accurately assessed.

The lender can therefore determine the amount of the eligible loan starting from the individual budget, taking into account the monthly installments that will have to be repaid but also providing a sufficient margin to leave the beneficiary of the credit a certain financial flexibility that allows him to make faced with the unexpected. In other words, it is a question of leaving the client with a sufficient safety margin to cope with any non-calculated risks , and avoiding being strangled by too tight a credit due to an unexpected event.


To leave a financial margin to cope with the reversals of luck

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The customer must keep in mind that many unforeseen events may occur in the credit period subscribed. For example, the customer can:

Lose the job suffer a major accident , or a serious illness or an expensive divorce. These numerous risks will have direct or indirect consequences on the credit taken out, since they can generate significant changes in income or expenses. It is therefore very important to consider these risks before taking out the credit , and to foresee a financial margin that will allow to face the possible consequences. In this case, consumption can minimize these risks thanks to very targeted preventive measures.

General principles for granting credit responsibly

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In fact, in the event of a serious blow, it is strongly recommended to quickly contact the financial institution concerned, and if necessary, the institution will be able to propose adequate solutions for the repayment of the credit subscribed, in order to avoid an aggravation of the situation customer financial.

In order to prevent the risks mentioned, the lender may propose, for example, the conclusion of an additional guarantee to cover the monthly installments, in order to help the credit recipient to protect himself from a payment default. This precaution thus avoids situations of over-indebtedness or even personal bankruptcy. It is a reasonable measure that follows the saying: prevention is better than cure.

In any case, the customer is strongly recommended to seek advice from the lender to draw up an inventory of applicable solutions and measures, based on his personal situation.