The loans include many types of products even if in the Italian legal system in some cases there are real regulatory holes on some categories of them. A problem that we feel especially in certain areas such as when we are called to renegotiate a loan or a mortgage. This happens because the legislator has disciplined the renegotiation of mortgages, establishing the modalities, but at the same time has kept the bank’s discretion in merit high especially for some forms of personal loans.
On the contrary, going even deeper we see that only a specific discipline with limits and methods of accessing it is given to disposals. So we must first make the distinction between a general personal loan and a assignment of the fifth, and see how to achieve the goal of renegotiation.
Limits for the renegotiation
Regardless of the lending institution (and also in the case of multi-year Inpdap loans), it is possible to renegotiate the loan against assignment of the fifth only if it passes through the renewal. This in turn is only possible if these conditions are met:
- an assignment of the fifth with a maximum duration of 60 months was made, regardless of the number of installments that has been repaid, a renewal and therefore a renegotiation can only be requested if you opt for a 10-year assignment;
- a sale for a duration of more than 60 months has been stipulated, for which there is the possibility of renewal and therefore renegotiation only if at least 40% of the current installments have been repaid.
There are no other possibilities of derogation from these conditions, even if more liquidity may be required in the renewal.
Restrictions on renegotiation of personal loan
We reiterate again: there is no possibility of renegotiating a personal loan. Not only that, if banks do not find the operation convenient, not being obliged by law to consider a request for renegotiation, they can refuse to enter into any negotiations. Furthermore, even if the possibility of renegotiating the original conditions is taken into consideration, the problem remains with the management of the original contract. In this case, in fact, it will not be sufficient that contractual changes are reported, such as a rate change or an extension of the duration to make the installment easier to repay.
For this kind of changes, the stipulation of a new contract is required, which never happens at zero cost, since both the extinction penalties and the possible costs of the same extinction count are foreseen. In addition, the new loan agreement will normally also recalculate the preliminary costs of the new file.
So you have two possibilities to be able to proceed with an operation with which to renegotiate a personal loan, trying to exploit the aspect of economic convenience, regardless of whether it was granted by a financial company.
- debt consolidation;
- the request for new liquidity.
Potential of debt or loan consolidation
The consolidation operation has an essential, indispensable and mandatory requirement: at least two loans must be included in the same loan. In this way, the previous loans are extinguished and the conditions are completely new for them, such as rates and duration. The goal is to achieve savings and greater sustainability of the installment, so even if we are not talking about a real renegotiation it is a good way to achieve similar objectives.
How to overcome the limit on personal loans
If you have a personal loan but it is not a transfer of the fifth, you therefore have no tools available to push a bank to take into real consideration our willingness to renegotiate the loan.
But what to do in the case of a loan, stipulated perhaps only a year before, for which, with a renegotiation, we would obtain a good saving, which, however, would also represent a fair renunciation for the bank? The only viable hypothesis is to ask for an increase in liquidity, even a modest one. What does it mean?
Let’s see a practical example. For example, we asked for a personal loan of 10,000 USD to buy a used car at the rate of 10%. After one year the same bank offers a 7% rate for the same sum. The only possibility we have of lowering the rate on the current loan is to ask the bank for additional liquidity, let’s say another 2 thousand USD. The situation in this regard could be the following:
- on the initial loan we would have an installment of approximately 212 USD with a duration of 5 years (with interest on maturity equal to approximately 2748 USD);
- at the end of the first 12 months we would have repaid around 1600 USD, with a residual capital of around 8400 USD.
By asking for new liquidity of 2 thousand USD, we would again be around 10 thousand USD, or rather 10400, which at the rate of 7% would lead to the following situation:
- installment of 205 USD always over 5 years of repayment;
- interest on the maturity of 1955 USD.
If we add up the total interest already paid of around 926 USD for the first year, and the standard 1% penalty of 1000 USD, we will therefore pay a total interest of 3880. If instead we had chosen a loan that has not penalty of extinction then the total disbursement will be 2880 USD. So an operation of this type is worthwhile only if there are no extinction penalties to pay, otherwise many more interests are ‘accrued’, enjoying a limited increase in liquidity.
In order to overcome these difficulties, some banks have made their loans more flexible, which allows the duration of the loan to be reviewed and extended. But this is not a form of renegotiation, precisely because the contractual conditions are not affected, but the options already provided are exercised. Finally, it should be emphasized that renegotiation is not always convenient, as demonstrated by the example given above. You must always start from calculations and comparisons on real data, also using independent calculation tools.