The modern banking system; born in Naples with the credit faith

Naples, in the sixteenth century, was rightly considered the second European city after Paris alone. It is well known that the Neapolitan roads were overflowing with people from all walks of life and origins. Naples attracted writers, artists, poets and philosophers, as well as numerous merchants. The city, also thanks to its port, was a nerve center for trade in the old continent and inevitably the need arose from merchants and shopkeepers to simplify the management of the flow of money.

It is in this historical context that the various mountains of piety, established by noblemen to counter the spreading phenomenon of usury, turned into real public stalls. These banks were not limited to the issue of pallets against money deposits but established a special title, the credit faith. Today we can say that the faith of credit has been the basis for the birth of the modern banking system but, let’s see together what it is.

The credit claim was a deposit made at a public desk and could be transferred to a third person by endorsement. The turn often and willingly contained special clauses that could suspend payment if the beneficiary had not complied with certain conditions.

The subjects of the Credit Faith

The subjects of the Credit Faith

Numerous subjects intervened in the issuance of a credit faith. The historian and writer Alberto Trivero Rivera explains the Faith of Credit.

“The client showed up at the cash desk of the Bank where the cashier accepted the cash that was paid to him, counting it and recording the details of the payment in the tear (first note), in the book of special income and in that of general income. this last book to the believer who filled out the credit claim based on the amount paid and the conditions indicated by the depositor.

The credit faith thus compiled returned to the cashier, who specified and signed under his own hand the amount of the deposited sum. bancale was then submitted to the aid of the faithful, who placed on a folded and fixed flap a stamp with the emblem of the issuing counter and then returned the credit to the cashier, who affixed his signature in correspondence of the dry stamp, specifying also the number of the page of the major book in which the account of the customer was reported, and finally delivered to the customer the credit faith. The believer also recorded the amount of the credit faith issued on a second general income book.

This duplication of registration was aimed at making the daily comparison easier, in addition to making the entire operation more secure and guaranteed; operation carried out at the office called wheel, which were given at the end of the day the two books of general revenues on the basis of which the major book of creditors was updated, where there was a list and details of the accounts opened by depositors “.

Historical evolution of credit faith

Historical evolution of credit faith

This particular and unusual mix of roles might have seemed complex and cumbersome, but in reality it served to simplify the feedback work, as well as to update daily what, without the slightest doubt, can be considered a current personal current account.

The credit lines are then very similar to the current bank drafts or bank drafts. They offered a valid alternative to paper money as the title was transferable in an almost unlimited way and accepted by any public bank.

The credit faith began to circulate in Italy and in particular in Southern Italy, first as the exclusive title of the Neapolitan Public Banks, then as the title of the Bankate and the Astro bank, which over time acquired the privilege of exclusive issuance. After the unification of Italy, credit lines continued to be widely used. They disappeared during the fascist period but, in the meantime, they had laid the foundations of the national banking system.

The loan repayment plan: the guide

Whenever you go to the bank to take out a loan or a loan, it is very important that the client has a clear vision of what the repayment plan foresees, also known as amortization plan. The latter consists of a debt repayment installment program, which breaks down into principal and interest, as well as specifying the residual capital due after each payment.

WHAT IS THE DEPRECIATION PLAN?

WHAT IS THE DEPRECIATION PLAN?

The video below allows us to shed light on the amortization plan, in particular we provide a definition of what the repayment plan is as it is intended by the banks.

WHAT IS THE DEPRECIATION PLAN REQUIRED?

WHAT IS THE DEPRECIATION PLAN REQUIRED?

The amortization plan is drawn up at the time of the subscription of the loan and is a very important document that allows the borrower to know what the conditions are, such as the deadlines and the amount of the installments, which are the payments to be respected and which and the residual debt.

The debt must be paid monthly (in some cases even quarterly or semi-annually) and the amount is debited to the current account indicated by the applicant; this sum includes several sub-items, including the following:

  • the principal amount, ie the amount of the loan repaid;
  • the interest portion, ie the interest accrued for the period of time considered.

After each payment, the amount of the residual debt is reduced by the portion relating to the principal amount, while the interest accrued, in the case of a mortgage loan, may be used at the time of the tax return, in order to benefit from the deduction on interest for the first home.

The following video allows you to specify not only the various types of depreciation, but also the features and constituent elements.

HOW MANY TYPES OF DEPRECIATION PLAN EXIST?

HOW MANY TYPES OF DEPRECIATION PLAN EXIST?

Before subscribing to a loan or mortgage, it is also important to understand which type of amortization plan is applied. For example, if the chosen loan had a variable rate, the amortization plan would only play an indicative role, as the interest rate would be subject to continuous changes, therefore also the installments.

There are different types of amortization plans, distinguished by the composition of the installments. In Italy, the most widespread amortization plan is that repaid to the French : in this case the installment consists of an increasing share of capital and a decreasing interest rate. In practice, at the beginning of the repayment program, interest is mainly paid and the capital is gradually repaid, the amount of the latter decreases resulting in an increase in the principal amount.

The amortization plan with Italian repayment is characterized by constant principal installments: in fact, this reimbursement requires each depreciation charge to be constant and paid in arrears.

The amortization plan with deferred installments consists of paying the installments at the end of the reference period, thus becoming relative to the previous period.

Instead, in the amortization plan with advance installments, payment is made at the beginning of each reference period.

There is another type of amortization plan, rather particular, called American. This repayment consists of a repayment program with two-rate accumulation installments and requires the debtor to repay the sum disbursed with annual and constant payments (ie accumulation shares) within a predetermined number of years.

In this case there are two interest rates: the technical rate of remuneration and the rate for the operation of capital formation. The first is linked to the execution of the global repayment transaction with periodic interests and the establishment of a capital, the second serves to capitalize the shares.

In any case, the American amortization plan is not widely used in Italy.

The German amortization plan resembles the French one for some characteristics, as it provides for constant installments and exclusion of the first. In this program, the interest rate is paid in advance, while the principal is paid in arrears. The initial installment that must be repaid immediately immediately after the signing of the loan contract consists of only interest and has a lower amount than the subsequent ones, which instead are constant and in which the capital and principal is included, always paid in advance in respect of at the maturation period.

One of the most complex amortization plans is that of offset financing. This amortization plan is associated with a current account which provides for the deduction of the balance from the residual capital on which interest is calculated.

To clarify the idea regarding this latter type of amortization plan, reference is made to an example taken from the prestitionline.it website.

If you have a loan with residual capital of $ 70,000 and you have the possibility of $ 20,000 in the current account associated with the loan, the interest would be calculated on the residual capital net of availability in the account, then on a residual capital of $ 50,000.

WHAT ARE THE CHARACTERISTICS OF THE DEPRECIATION PLAN? FOCUS ON PRE-AMOUNTING

WHAT ARE THE CHARACTERISTICS OF THE DEPRECIATION PLAN? FOCUS ON PRE-AMOUNTING

All types of amortization plan provide for common features, first of all the initial period, called pre-amortization, during which interest is not repaid and not capital.

The same interest rate as the actual loan is applied to the pre-amortization period; this rate is added to the depreciation and from this derives a slight increase in the total repayment duration.

The duration of the pre-amortization varies from institution to institution and depends on the internal mechanisms of supplying the money.

Loans for poor families in Calabria

The Calabria region, like the other regions of the national territory, is affected by the difficulty of accessing credit which many companies and individual citizens are encountering. For this reason the regional authority has decided to allocate a fund to provide loans to families in difficulty, with subsidized rates and long deadlines for return. See tnrovers.com

The project is characterized by social aims: the objective is in fact to support disadvantaged people in the purchase of primary goods and necessary expenses, such as those related to education, health and the payment of mortgages and rents. Unlike traditional loans, however, no special guarantees will be required, as is the case with microcredit loans and the funds will therefore also be accessible to those who do not have a fixed salary (as in the case of temporary workers) and those who have been subjected to of reports to the CRIF (the credit risk bank, also known as the registry of the “bad payers”).

Now let’s see in detail the characteristics of the loan.

Now let

The Calabria Region, in collaboration with the European Social Fund, has decided to allocate a total of twenty million USD for this project, most likely destined to be increased upon exhaustion (a deadline for the submission of requests to date is therefore not foreseen).

Each applicant may request the maximum amount of ten thousand USD which will be returned at more affordable rates than what is offered by the market at this time.

The requirements for access

The requirements for access

All adults, European or non-EU citizens, with residence for at least three years in Calabria at the time of the request can access the funds. For non-EU citizens, a residence card or a residence permit with expiry date after the end of the loan is required, in addition to a job (dependent or independent).

It is necessary to have a gross family income that respects the parameters shown in the table below (according to what can be demonstrated by the last tax return)

composition of the family unit

(number of people)

total income less than USD

1 17,500
2 22,500
3 25,000
4 27,500
5 30,000
6 (and above) 32,500

The applicant must also demonstrate that he can meet the repayment of the loan through work (even if not yet in progress) or through other certifiable income. The loan is incompatible with other similar loans and with situations of absolute inability to repay.

Eligible expenses

Eligible expenses

Housing costs, including renovations, the search for a new home following an eviction, payment of arrears rents and the costs for connection of utilities but also expenses for the services are considered eligible for loan purposes. appliances considered essential, such as refrigerators or washing machines.

The funds can also be used for the expenses related to particular events such as the birth or adoption of a child, the illness or death of a family member, for the medical expenses of the members of the family nucleus and to pay off the debts incurred with banks or financial institutions to support the admitted expenses.

Expenses related to education and training for job reintegration are also accepted, including any loans signed for the same purposes.

The methods of presentation of the application and the necessary documents

The methods of presentation of the application and the necessary documents

The application must be sent by registered mail with the forms provided by the notice (you can find them at this address, together with the updated text of the announcement). The following documents must also be attached:

  • identity card of the applicant
  • tax code of the applicant and of all the members of the household
  • residence permit for non-EU citizens
  • documentation of expenses incurred or to be incurred (eg invoices, estimates or financing in progress)
  • tax returns (Unico, 730 or CUD)
  • a declaration attesting to the composition of the family unit, residence in Calabria and the absence of other similar loans (but refer to the complete document for details and the text of the request).

The loan is repaid in a maximum time of 60 months (five years) through constant monthly installments, with an interest rate of 1%.

Loans from banks to households and businesses fell in October

The figures for the month of October were expected, the first full month following the EB’s liquidity auction, precisely in order to verify the effect of the same on the credit dynamics of our country. However, the result that seems to come from the effort of the continental central bank is much lower than expected, if only it is thought that loans to the private sector by Italian banks continued to contract. The only reason for consolation, quite partial, is that the negative trend seems to progressively lose its strength, at least based on the Bank of Italy surveys.

Credit to families

Credit to families

As far as the private sector is concerned, loans fell 2.1% on an annual basis, a correct figure so as to take into account securitisations and other receivables that after being transferred were written off from the financial statements. The contraction, however, stands at 2.3% if the September figure is taken as a basis. The contraction recorded by credit to families was more contained, which fell by 0.6 per cent over the last year, while they showed a decrease of 0.7% on a monthly basis. However, the figures for non-financial companies are more negative, down on an annual basis, by 3.1 per cent and 3.3 per cent compared to the previous month.

With regard to funding, in October the annual growth rate of private sector deposits reached 2.3 percent, while in September the rise reached 3.6 percent. Very negative instead the figure of bond funding, which must be included in the bonds held by the banking system, actually dropped by 17.4 percent compared to twelve months earlier, and 14.2 percent against the growing settembre.Ancora bad loans, with a figure that touched +19.3 percent on an annual basis, 19.9 percent compared to the previous month.

Mortgage loans

Mortgage loans

On the other hand, interest rates on mortgage loans disbursed to households in October fell slightly, including ancillary costs, with a figure of 3.18 per cent, compared to 3.27 per cent in the previous month. With regard to new consumer credit disbursements, the new survey decreased from 9.24% in September to 8.97%. The same trend for interest rates relating to new loans to non-financial companies with an amount of up to one million euro, which reached 3.54 per cent, against 3.60 per cent in September. Above the million threshold, the rate is 2.16 percent, compared to 2.43 in the previous month. Finally, the interest rates on total outstanding deposits remained at 0.79 per cent, the same as in September.

As can be understood from the data, the effort put in place by Mario Draghi, in an attempt to supply petrol to the engine of recovery by inserting resources in the banking system with the aim of transferring it to families and businesses, has therefore not yielded great results.

Loan rejection despite good credit bureau – smart financing

The credit bureau is not always guilty if a Loan rejection is on the table despite good credit bureau. Even if most borrowers think so. There are several other factors that play an important role in taking credit. If these do not agree, it can also come to a rejection.

What are these factors and how they optimally intermesh in the best case, we would like to explain here.

Good credit bureau, nonetheless rejected – solutions

  • A credit for all cases, which always fits everyone, does not exist
  • Use the attached credit comparison to avoid failures
  • Apply for your loan – initially without obligation – but with immediate approval
  • Choose a loan offer that suits your specifications

Loan rejection despite good credit bureau – overall picture counts

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In the end, it can be small things that trigger a Loan rejection despite good credit bureau. As a consumer, you always ask yourself what you did wrong.

But maybe you yourself are not at fault for the rejection. But the fact that all offered factors and collateral just do not fit the loan. For example, large loans with a long maturity call for a very different hedge than small consumer loans that can be taken out by the dealer around the corner. All this and much more must be taken into account when borrowing. But what factors can lead now to a Loan rejection despite good credit bureau?

Income

Income

The income is very often the crucial sticking point in a Loan rejection. It is usually not high enough to pay the loan. It does not depend on the mere amount of the wage. It is also important how many dependent persons the borrower has to look after.

A family man with two children must have significantly more income than a single without maintenance obligations. Therefore, it happens very often that the income for the Loan rejection is responsible despite good credit bureau.

Other loans and financial obligations

Other loans and financial obligations

A loan is not a loan – that’s what many consumers think. And as long as all liabilities are paid on time, this may be true. But there are banks that are bothered by this and are explicitly looking for borrowers who do not need to provide additional loans.

The employment contract

The employment contract

If there is no permanent employment, in many cases the loan application is not approved. Most banks would like to have a minimum of three months in the application process. Some also want six months or even a whole year. In the best case one asks this in advance, so that it does not come to a Loan rejection despite good credit bureau.

By the way: In the case of fixed-term employment contracts, care must be taken that repayment of the loan takes place within the time limit.

For micro loans this should be feasible.

Too many loan requests

Too many loan requests

Finding a suitable loan is not always easy. Too many providers vie for the favor of borrowers. Therefore, many consumers ask several banks. They want to take advantage of the best offer and therefore compare it in advance.

When inquiries but also always a query of credit bureau made. This leaves traces and can lead to a Loan rejection despite good credit bureau. Because the banks see the requests and do not always respond positively. Therefore, it is recommended to use a comparison calculator to find a suitable loan.

This does not touch the credit bureau of the seeker, so that no traces are left.

Lack of collateral

Lack of collateral

Not everyone is thrilled when the bank proposes a residual debt insurance or term life insurance to the credit. Both hedges cost a lot of money and only bring something if the borrower really gets into trouble.

Therefore, many try to avoid these safeguards. Banks can not dictate that such insurance be taken out to the credit.

However, you can reject the loan application if there is no hedge. And then it can come to a Loan rejection despite good credit bureau, without the borrower must have profound reasons in its economic position for it.