The legislation that introduced and governed the assignment of the fifth has focused on the clarity and precision of the reimbursement methods, and at the same time also on the hypotheses and methods for accessing the renewal.
As for the hypothesis of early termination of the assignment of the fifth, the legislation leaves some decision-making freedom to the various financial or banks, especially as regards the formal part, such as for example the use of forms or channels to be used to request the counts.
Main characteristics and functioning of the loan
First of all, let’s see some distinctive features of this type of loan. The assignment of the fifth is a method of financing that for some people can be really convenient in case of need of a rather high amount, other ongoing loans or still difficulty in obtaining a loan because bad payers or protested. It can be obtained from pensioners (who can also count on conditions facilitated through the Social Institute convention) and from all employees with permanent contracts (and in some cases also with fixed-term contracts of sufficient duration). These can be used for example in public or state bodies, but also in private companies.
Regardless of the category to which it belongs, the refund of the amount obtained as a loan is based on the reduction, every month, of 20% of the net salary (salary or pension). Finally, the transfer of the fifth has rather long return times, which can reach up to 10 years (120 monthly installments).
Beware of depreciation
The fact that every month, on the salary or on the pension, the same amount will always be retained, equal to a maximum of 20% of the net amount of the emoluments received, must not lead us to believe that all the installments will consist of the same share of capital and interest. Even in the assignment of the fifth, in fact, the type of depreciation used is the “French” one.
Therefore the first installments will mainly consist of interest while over time the share of capital will increase and that of interest will tend to decrease. This aspect must be taken into consideration before proceeding with the early extinction of a transfer of the fifth that is already in progress. Just try to answer questions with the help of simple calculations that can be done using free independent tools that are available online. In particular, the most important are 2, namely:
- Are they at the beginning, the middle or the end of the contract? If they are at the beginning then it will be economically advantageous to proceed with the early extinction, in the middle of the convenience it could still be interesting, while towards the end of the contract it is probably not recommended to proceed;
- I need new liquidity, should I renegotiate? In reality, with the assignment of the fifth, the early repayment of the current loan is started in order to open a new one. So we must also understand if the reason that pushes us to extinction in advance is the only solution to a possible problem and how much this choice could cost us in reality.
How does it work with insurance?
The assignment of the fifth as a method of financing is made to fall into the category of personal loans, even if it is accompanied by compulsory insurance coverage. The question of reimbursement of insurance, in the event of early termination of the transfer of the fifth, has been the subject of some interventions by the competent authorities, to provide greater protection and clarity.
Without these due clarifications let’s see what to do, if we are able to proceed with an early extinction of the assignment of the fifth. Here are all the steps and costs to be addressed.
The payment of a penalty and the extinct count
The early extinction of the assignment of the fifth is permitted by law, which gives as indications for proceeding in this direction those of paying the residual amount of the capital still not reimbursed, with the addition, however, of a penalty. The latter is higher the longer the balance of the loan debt is left.
Should more than one year be missing on the date foreseen for the payment of the last installment, the delay for example amounts to 1% of the sum remaining to be paid. Times of less than one year instead provide for a late payment, for example 0.5% of the residual amount. The exact amount to be returned is calculated by the bank itself in the so-called “extinguishing statement”. For example, if a sum of $ 3,000 remains to be paid to pay off the loan, the penalty will pay $ 30 plus the residual capital in a period that exceeds one year, $ 15 more if less than one year is left to extinction. But be careful! In the extinctive counts, the following must also be reported in detail:
- the residual capital to be repaid again;
- the amount of the early termination penalty;
- the part of insurance premiums that the bank or financial company will have to return (in fact, these are “paid” premiums which, due to the early extinction, cannot be enjoyed by the holder of the contract for the sale of the fifth).
Furthermore, the accepted methods of extinction should be specified (for example, the details for making the payment with a bank transfer, specifying the data and the reasons to be reported) and how to proceed to obtain a refund of the insurance premiums.
These conditions therefore apply to all companies or banks that grant this loan. We would like to remind you that each bank or financial company requires the use of its own forms, different repayment methods, and therefore it is necessary to contact the person who provided the transfer of the fifth to know exactly what and how to do it.
He lost preliminary fees and stamp duty
If you decide to early terminate the transfer of the fifth, in addition to paying the penalty, you must also take into account other expenses provided for by the individual contracts and contained in the document IEBBC, European Basic Information on Credit to Consumers. In general, it can be said that the preliminary and stamp duty expenses will certainly be lost, while it is possible to recover some bank commissions (depending on the individual loan agreement), returned in the form of a repayment (see also Early repayment of a loan ).
As far as insurance costs are concerned, they are returned, upon request by the customer, for an amount equal to the amount of the unused premium. At this point, the banking or financial institution prepares a release letter in which they declare that they will no longer have any claim for compensation and that they have correctly received the amount due. This letter will be sent to the employer who will thus be able to suspend monthly salary deductions.