What is and who can get the 2018 proxy loan
The definition of loans with delegation means those types of financing whose installments are paid, instead of the contractor, by a specific delegate who identifies with the employer.
This way those who subscribe a loan with delegation will be reduced by the installment from their salary directly to the source, a situation which in some way reassures the lending financial institution. In fact, banks and financial institutions typically do not require any other guarantee for granting a loan with delegation except that of the presentation of a paycheck of a permanent contract.
The delegated loans are in fact based on the employee’s ability to delegate the payment of the installments of a loan to a third party who is obliged towards the creditor. Possibility that is described in article 1269 of the Civil Code.
Due to its characteristics, the proxy loan is configured as a tripartite contract. The subjects concerned are: the bank or financial institution that grants the loan, the worker and the employer. The latter undertakes to repay the installments of the loan in place of his employee, reducing the installment from his paycheck.
All public and private employees can apply for a loan with delegated payment. However, it is necessary to underline that for those who are hired in the private sector there are normally some requirements to be met.
In principle, this is a minimum length of employment which varies according to what is established by the company that grants the insurance policy to cover the loan.
Although, as already mentioned, no additional guarantees are required to the paycheck (such as the signature of a guarantor or a mortgage on the home) the current legislation provides for the stipulation of a mandatory policy against life and employment risk.
In any case, both for public and private employees it is necessary, before taking out the loan, to make sure that their employer accepts this type of loan.
Transfer of the fifth and delegation of payment
At this point, however, the question arises: what difference is there between loans with delegation and assignment of the fifth? Essentially none, except that the delegation loans can cover 40% of the salary instead of the 20% expected in the assignment of the fifth.
By subscribing to a loan with payment delegation, it is also possible to obtain higher sums than would normally be granted through a transfer of the fifth or a traditional personal loan. The interest rate is fixed and the amortization plan can extend up to a maximum of 120 months. The minimum duration is usually set at 24 months.
It should also be stressed that loans with delegation can add up to disposals and thanks to this characteristic they are often called “double fifth”.
Not only. The loan with payment delegation can also coexist with other payroll withholdings. In this case, however, it is essential that the sum of the various deductions does not go beyond the threshold of 50% of the monthly net salary received by the applicant.
The role of the employer
Another important point to be faced when comparing the delegation of payment and assignment of the fifth is that of the obligatory nature of the assignment. To be clearer, while the assignment of the fifth of the salary is a right of the worker (and therefore does not require the consent of the employer) the delegation loans are not.
Unlike loans on assignment of the fifth, in which the assignment is only notified to the company or institution where the beneficiary is hired, the delegation loans require the approval of the employer. The latter therefore has the option of not accepting the employee’s request for payment delegation, thus preventing him from accessing credit.
However, it should be noted that in principle state administrations always approve loan applications with payment delegation. Solution that usually also sees the possibility of benefiting from advantageous conditions thanks to the agreements signed between institutions and credit institutions.
When to apply for funding
To conclude this overview of this type of financing, we would like to remind you that there are typically two situations in which loans with delegation are used :
- need to borrow very high figures that could not be achieved through the transfer of the fifth
- the need to speed up the closing of an existing loan
But the benefits of the delegated loan are not over. Unlike most loans, in fact, this particular line of credit can be requested even if other loans or foreclosures are in progress.