Paying off a loan with the assignment of the fifth before the expiry is possible by paying the amount due and paying a penalty, generally indicated in the contract.
The latter, in fact, is envisaged as a protection to the bank's interests to make up for the loss of income, deriving from the interest on the installments, which will not be paid.
What is the Cession of the Fifth
To understand how the early repayment of the fifth assignment works, it is necessary to know how it works.
It consists of a type of loan in which the public and private employee, or the pensioner, binds one fifth of their salary to the loan.
The maximum amount of the installment therefore cannot go beyond 20% of the monthly salary. At this point , the employer will directly pay the sum of the installment to the bank or credit institution that provided the loan.
The guarantees required to access the salary-backed loan are generally: one's own employment contract with the severance pay and the signing of a Life Policy and a Loss of Employment Policy. Through these guarantees, lenders and banks are generally more inclined to accept the loan.
For this reason it is presented as the ideal solution for all those who need to apply for a loan but have a history of bad payers.
The Cession of the Fifth is therefore the ideal loan solution for those looking for streamlined procedures with a good chance of obtaining the requested sum.
Early termination: how it works
Early repayment takes place by paying the entire remaining sum to the entity that disbursed the loan . In this way it will be possible to obtain the cancellation of the contract.
It is important to know that in the case of the assignment of the fifth, the credit institution collects the interest with the first installments to receive the actual capital afterwards. It follows that the prime installments contain a small amount of capital but a lot of interest. Subsequently, however, the proportions vary, and are reversed in the long run.
For this reason it is preferable to evaluate the early repayment of the Assignment of the Fifth especially in the initial phase of the loan.
As for the penalty , the calculation is made on the part of the actual capital that has yet to be repaid.
Generally, the application concerns amounts exceeding 10,000 euros, considering the rate indicated in the contract.
How to deal with the insurance?
In the event of early repayment of the loan , it is possible to obtain reimbursement of the insurance stipulated at the same time as the assignment of the fifth.
With the Assignment of the Fifth it is in fact necessary to stipulate a Life Policy and an Employment Risk Policy or CPI , guarantees to protect the bank or credit institution that can provide the loan with lower risks.
If the policy is at the expense of the applicant , it is possible to obtain reimbursement, as the premium paid at the time of subscription was not used.
On the other hand, if the premium is paid by the financial institution, it will not be possible to obtain a refund.
In any case, it is recommended to always carefully read the items of the contract "Insurance" or "Insurance costs".
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