What we need to be careful about when we decide to apply for a payday loan

The current moment of economic uncertainty could represent an obstacle more for all those people who are wondering whether it is worth accessing the consumer credit to manage some expenses, whether it is necessary (or unexpected) purchases or whether they want to give themselves a gift or a little luxury.

There are some important elements to consider in order to be able to choose with awareness if it is worthwhile to resort to financing and to orientate yourself better in the choice. Analyzing your economic and financial situation to understand if you can afford a loan is a first important step, as well as inform yourself about your creditworthiness, even with Advanti. But it is not enough: we also need to know what we will find in front of us when we ask for funding.

First of all, it must be clear who can lend us money, to avoid incurring unpleasant surprises.

Banks and financial companies that have received authorization can grant loans (pursuant to Articles 106 and 107 of the Consolidated Law on Banking) and are registered on the register held by the Italian Exchange Office. A further guarantee for the consumer may be the registration of the credit institution in Assofin, the trade association. To check it, simply consult the list on the site.

After this initial verification, the type of loan and its real cost should be assessed as a whole.

It is not enough to ask how much the monthly payment is, you need to be careful to unravel among the many variables: TAN (nominal annual rate), APR (annual percentage rate), expenses (mandatory and not) and any optional insurance costs.

The TAN indicates only the interest payable on a loan while the APR (also known as ISC, a synthetic cost indicator) indicates the real cost of the loan, including the mandatory ancillary costs such as the costs of investigating the case, the collection commissions and mandatory insurance. The parameters that determine the amount of the APR are set by law. State stamps and taxes, optional insurance and overdraft fees are not included in the APR.

Interest rates must fall within the criteria established by Italian law (Law 108/1996), otherwise the crime of usury will occur. To understand whether the rate applied by the credit institution we are referring to falls within the statutory time limits, we need to compare it with the actual average global rates that the Bank of Italy issues every quarter. Once you have this data, simply increase it by a quarter of its value and add a further margin of 4 percentage points. If the difference between the limit thus obtained and the average reference rate does not exceed 8 percentage points, the rate is within the expected parameters. The threshold rates are however indicated in the quarterly communication of the Bank of Italy ( here you find the one referring to the first three months of 2012, valid until March 31, in pdf).