The home loan is a particular type of financing that allows you to obtain liquidity for the main needs concerning the home. Among the most common purposes of this loan we find the furniture loan. http://na7na7.com/how-to-rebuild-your-credit-after-bankruptcy/ for clarification
The furniture loan can be used to purchase a portion of, or the entire home furnishings. This type of financing can be disbursed as:
- personal loan: the buyer receives the requested amount on his account, pays it to the seller for the purchase of the furniture, and repays 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 lending financial institution, and proposes to its customer the activation of the loan which is tied 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 repays the debt in accordance with the amortization plan.
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 applied;
- any other prices and conditions applied, including higher charges in the event of late payment;
- the amount and methods of financing;
- the number, amounts and due dates of the individual installments;
- the annual percentage rate of charge (APR);
- the detail of the analytical conditions according to which the APR can be possibly modified;
- the amount and reason for the charges that are excluded from the calculation of the APR;
- any guarantees required;
- any insurance coverage required and not included in the APR calculation.
The law guarantees the consumer the possibility of carrying out the early repayment of the loan. If the consumer decides to choose this option, in addition to the reimbursement 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 shown in the contractual conditions signed.
Evaluation of the criteria
Below we schematically illustrate some specific evaluation criteria of the furniture loan.
- Risk policies : each Institute applies its own risk policy in evaluating requests, based on the statistical data it possesses (credit scoring). These data constitute the tool that allows the Institute to keep insolvencies below a certain level.
- Income level : the acceptance of requests is normally also subject to the appraisal of the applicant’s income level and the relationship between the latter and any repayment installment.
- Credit reliability : the creditworthiness of the applicant is of great importance. It is important to stress that this assessment has no “moral” meaning. The Institutes merely estimate the level of risk associated with each request, also on the basis of the indications transmitted by the Risk Centers. If the applicant’s credit history has some “flaws” (delays in repayments of previous loans, outstanding, etc.), the probability that the request will be accepted is obviously lower. In some of these cases, a valid alternative is constituted by the Transfer of the fifth: this solution, by offering the appropriate guarantees to the lender, allows to adopt more flexible evaluation criteria.
Furnishing 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 loan applicant which confirms an adequate financial reliability of the same.