Assignment of the fifth, the alternative to the most expensive loans to save
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A new tool for obtaining and repaying a loan
The assignment of the fifth of the salary or pension is the new business of the banks. For savers it is an additional financing solution, which is spreading from pensioners and public employees to workers in private companies (for now, according to operators, at 12-13% of the market). What is the assignment of the fifth? It is a particular type of personal loan, which provides for the repayment of the loan through the transfer of shares of one’s salary or pension for a value of up to one fifth of the net salary. Basically, the installment is withheld at the origin, on the salary or pension.
The rates are cheaper than personal loans, because the “Cqs” (“salary-backed loan”) is more guaranteed: employment and life insurance is mandatory. It means that there are no repercussions on the heirs in the event of death and that if you lose your job, the debt is paid.
Furthermore, the impact on banks’ balance sheets is less than personal loans after the European intervention on capital requirements (Crr) two years ago, which reduced the prudential weighting factor from 75% to 35%. A patrimonial discount and a success for Italy, since the instrument of the “salary backloan” as well as here seems to exist only in Brazil and Portugal. Combined with the new supervisory rules launched by the Bank of Italy in 2020 and the stricter regulation of Assofin, this has made the sector attractive for large groups and more transparent, reducing the many intermediaries.
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