The loan for the home is a particular type of loan that allows you to obtain liquidity for the main needs that affect the home. Among the most widespread purposes of this loan, we find the furnishing loan.
THE LOAN FURNISHING
The furniture loan can be used to buy a part of, or the entire home furnishings. This type of financing can be provided as:
- personal loan: the buyer receives the required sum on his account, pays it to the seller for the purchase of the furniture, and reimburses the loan according to the installments provided for in the amortization plan;
- finalized loan: in this case the retailer has established an agreement with a leading financial institution and proposes to his client the activation of the loan which is bound to the purchase of the specific asset. If the investigation is successful, the sum of money is delivered directly to the seller, while the buyer reimburses the debt in accordance with the amortization schedule.
No specific guarantees are required.
THE ELEMENTS OF THE CONTRACT
The law states that a furniture loan contract must contain the following elements:
- the interest rate charged;
- any other price and condition applied, including the higher charges in the event of default;
- the amount and methods of financing;
- the number, amounts and expiry of the individual installments;
- the annual percentage rate of charge (APR);
- the detail of the analytical conditions according to which the APR can possibly be modified;
- the amount and purpose of the charges that are excluded from the APR calculation;
- any guarantees required;
- any insurance coverage required and not included in the APR calculation.
The law guarantees the consumer the possibility of early repayment of the loan . If the consumer decides to choose this option, in addition to the repayment of the residual capital, he could pay a penalty that must not exceed, by law, 1% of the financed capital; the exact terms of the penalty are reported in the signed contractual conditions.
Below we illustrate in a schematic way some specific evaluation criteria of the furnishing loan.
- Risk policies: each Institute applies its own risk policy in the assessment of requests, based on the statistical data it has (credit scoring). This data is the tool that allows the Institute to keep insolvencies below a certain level.
- Income level: the acceptance of the requests is normally also subordinated to the evaluation of the income level of the applicant and to the relationship between the latter and the possible repayment installment.
- Creditworthiness: the creditworthiness of the applicant is of great importance. It is important to emphasize that this evaluation has no “moral” meaning. The Institutes are limited to estimating the level of risk connected to each request, also on the basis of the indications transmitted by the Central Risks. If the credit history of the applicant has some “flaws” (delays in repayments of previous loans, unpaid debts, etc.) the probability of the request being accepted is obviously lower. In some of these cases a valid alternative is constituted by the Assignment of the fifth: this solution, offering the appropriate guarantees to the financing Institute, allows the adoption of more flexible evaluation criteria.
Furniture loans are provided by financial institutions and banks. They do not require specific requirements, except for a certain income and a credit position of the applicant for the loan which confirms adequate financial reliability of the same.