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Personal loan: what it is and how it works

The personal loan represents the most widespread form of financing in Italy and, despite a slight decline, still resists the consequences of the economic crisis. In the “Personal loan guide” we explain everything you need to know about this type of loan Money For Jam.

The personal loan is a customer credit commodity that provides for the financing of a pre-established amount at a steady and repayable income price to an amortization plan with constant installments and falls within the category of non-finalized loans , i.e. in those financing operations that are not directly linked to the purchase of a specific good or service.

Therefore, unlike what happens in finalized loans, the figure of the agreement does not come into play, but the contract is concluded directly between the lender and the applicant, who are therefore the only interested parties.

The advantage of a personal loan is that it can be requested, therefore, without having to justify the use that will be made of the loan obtained. Its disbursement is therefore not subject to the purchase of a specific good or service , and the bank makes it available directly to the customer who requests it, without the intermediation of a contracted seller.

Consequently, if the loan request is accepted, the payment of the sum takes place directly in the hands of the consumer, and not to a third party (the contracted party).

Also missing is the presence of a good or service that can act as a guarantee for the possible insolvency of the debtor, which makes this product rather risky for the lender.

In these cases there is no relationship between the credit agreement and the sales contract, nor is there a collaboration relationship between the seller and the lender, but by providing this information it is possible to obtain more advantageous rates from the lender.

What is a commercial loan?

Usually, a commercial loan is a long-term loan. There are various reasons to get one: hire more staff, buy new equipment, buy commercial property, or buy a competitor company. As with other loans, the lender will want to know what the funds are for and how they will impact profits.

These commercial loans are often used for the purchase of commercial real estate, such as offices, industrial or commercial spaces. Investing in commercial real estate tends to be riskier than buying residential real estate, so banks will consider a number of factors before granting them. This is cause of marketable properties have elevated opening duration than residential property. Besides, retail properties can have very high maintenance costs. These risks affect each bank’s lending criteria when considering commercial property loans.

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