The loan for marriage allows you to organize with serenity an important moment, perhaps the most remembered, in the life of a couple.
The expenses to be incurred for the organization of a wedding (the purchase of clothes, wedding rings, lunch offered to guests, photo album, honeymoon, etc.) can significantly increase the necessary budget.
The couple that has to face this expense can be supported by two forms of financing: the finalized loan and the personal loan.
The finalized loan is offered directly by the retailer who has entered into a collaboration agreement with a bank or a credit institution and is exclusively linked to a specific product sold (eg the honeymoon, or wedding favors).
The finalized loan amount is paid directly to the seller, while the user must pay the credit installments in accordance with the amortization schedule.
If a finalized loan solution is not available, or if the user needs additional liquidity, it is possible to resort to another form of financing which is presented below.
Taking into account that the services/goods needed for the ceremony are difficult to buy at a single point of sale, very often the loan or the specific loans must be accompanied by additional financing.
In fact, a specific personal loan for marriage or a salary-backed loan can be coupled to the finalized loan . The finalized loan can also be replaced entirely by a single personal loan for a marriage, or by a single loan of the fifth.
PERSONAL LOAN FOR WEDDING
The personal loan for marriage can be a valid opportunity, as it allows you to merge different expenses into a single debt, minimizing the costs of the investigation. On the other hand, it offers a usually higher rate than the finalized loan.
To find the loan that is most convenient and suitable for your needs, you can access the online loan comparison section of Becky Sharp.it.
Asking for marriage funding can be an opportunity to make an unforgettable day. It is possible to find an analysis of the spread of this type of loan in this article published by Becky Sharp.it Observatory.
In general, the granting of a marriage loan is not subject to the presentation of real guarantees (or pledge or mortgage rights on assets owned by the applicant).
However, in some cases, in order to limit the risk of insolvency, the financial institutions submit to the applicant a contract that provides for the repayment of installments, or a single bill, able to guarantee a part or the entire amount disbursed.
The most widespread form of guarantee is the signature of a co-obligor or a third guarantor, who acts as the guarantor of the success of the transaction. This is a rather common request, in the presence of particular conditions (such as an applicant with recent seniority or a particularly high amount).
In any case, it is not possible to establish rules that are valid a priori since the possible request for guarantees is at the discretion of the individual Institute which decides on a case-by-case basis, depending on the risk profile of the transaction and the individual applicant.
THE ELEMENTS OF THE CONTRACT
The law states that a marriage loan contract must contain the following elements:
- the interest rate charged;
- any other price and conditions 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.
NON-PAYMENT OF AN INSTALLMENT
The interruption of the repayment of the loan entails the immediate non-fulfillment of the financing institution and the risk of unpleasant consequences:
- the interest due would be increased, with the application of a default;
- there is a risk that your name will be included in the list of latecomers and/or reported to credit protection bodies (the Central Risks), which will share information with the entire banking and financial system. The result will be a worsening of the customer’s creditworthiness and a consequent greater difficulty in obtaining credit in the future.
Failure to timely pay even a single installment authorizes the lending institution to unilaterally terminate the contract. The customer will be required to pay all bank and protest charges as well as all the costs incurred by the Institute to recover the sums due, in addition to a possible penalty.
The law establishes that it is always possible to extinguish the loan early with respect to the agreed term.
The customer who chooses to exercise this option will be required to repay the outstanding capital, plus a penalty which, by law, cannot exceed 1% of the amount financed.
If the contract does not specify the amount of residual capital after each repayment installment, the sum of the present value of all installments not yet due on the date of early repayment shall be understood as residual capital.
Below we illustrate in a schematic way some specific evaluation criteria of the marriage 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 stress that this evaluation has no “moral” meaning. The Institutes are limited to estimating the level of risk associated with each request, also based on the credit reports provided by the Central Risks. If the credit history of the applicant has some “flaws” (delays in repayments of previous loans, outstanding, 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, a solution which, by offering the appropriate guarantees to the financing institution, allows the adoption of more flexible evaluation criteria.
When choosing between multiple financing offers, it is good to consider the overall burden of each one, without limiting yourself to evaluating the monthly installment only.
However, this is sometimes not an easy operation, as there may be a large number of financing items (amount paid, interest, ancillary charges, initial costs, insurance costs) and cannot be easily measured immediately.
In general, the elements that should be considered before signing a loan agreement are:
- TAN (Nominal Annual Rate)
The TAN represents the interest rate, expressed as a percentage and on an annual basis, applied to the financed capital (sometimes including any insurance costs or preliminary investigation costs). It is used to calculate, starting from the amount financed and the duration of the loan, the portion of the interest that will be paid to the lending institution and which, added to the capital share, will determine the repayment installment.
- APR (Global Effective Annual Rate)
The APR is a measure, expressed in percentage terms, with two decimal places, and on an annual basis, of the total cost of the loan. Unlike the TAN, the APR is inclusive of any additional charges, such as investigation costs and insurance costs, which are charged to the customer.
However, under certain conditions, the Italian legislation allows a certain discretion, excluding or including some items in the calculation of the APR: insurance costs, for example, if optional, can be excluded from the calculation.
Pay attention and carefully consider your overall expenditure, analyzing every single item of the offer that is proposed to you.