When the interest rate becomes a rate of usury: how to find out and how to defend yourself
Making a request for Personal Loans nowadays has become a custom since it is a quick and easy solution to obtain liquidity and implement projects and desires of many people who do not have the necessary liquidity to realize them or who prefer not to touch the own personal savings.
The Personal Loan provides for the repayment of the capital provided through a French amortization plan with a fixed term and a constant installment over time. The installment is calculated based on the customer’s monthly repayment capacity; it must be proportionate to the monthly income or to what it takes in paychecks but it will also be calculated on the basis of the other financial commitments in progress, other loans or mortgages.
These checks are carried out so that the customer can support the new installment safely without incurring in situations of economic difficulty that would result in unpaid, late payment and reports to the Crif and in the database as a bad payer.
The loan installment is made up of a portion of capital and a portion of interest that make up the remuneration of the bank or the lending credit institution. The interest rate applied to the Loan varies according to the type of loan itself but also to the Bank’s risk policy. In fact, before issuing a loan, each bank and credit institute carries out a series of checks and checks both in their internal data banks and in the Crif to go to see the customer’s credit profile and its economic reliability.
When an interest rate becomes a usury rate?
To understand when we are faced with a rate of usury, we must necessarily refer to the TEGM, ie the Average Global Effective Rate (often also referred to as TEG, Global Effective Rate). If this is higher than the threshold of the reference indices established quarterly, we are faced with a usury rate.
The TEGM is a rate indicator and represents an average value that is calculated every three months by the Bank of Italy on behalf of the Ministry of the Economy and Finance on the basis of the interest applied by various credit institutions that already includes the ancillary charges . The results are published periodically in the Official Gazette, on the Bank of Italy website and also on the portal of the Ministry of Economy and Finance for which it is easy to access all Banks and Credit Institutes but also by the Customer.
The Bank of Italy’s task is to verify that all banks and credit institutions comply with the limits set for usury.
From May 14, 2011, the Average Global Effective Rate is calculated by increasing the amount by a quarter and adding a margin of a further four percentage points. According to the Treasury Department statement of 18 May 2011, the difference between the limit and the average rate should not exceed eight percentage points.
What to do in case of wear rate?
The Customer who has a Loan contract with a usury rate must necessarily contact the ABF, ie the Financial Banking Arbitrator. Addressing the ABF is the most cost-effective solution for the customer compared to the appeal to the court as it provides for the attempt to resolve extra-judicial disputes, avoiding if possible or reducing legal fees. Only in the most serious and complex cases, where a first solution can not be found with the Financial Banking Arbitrator, is the ordinary trial of the Court.
Therefore, since choosing the best financing based on your income situation is not so simple and there are many elements to watch out for in terms of consumer credit, before signing any financing contract, it is always good read all the items carefully indicated and verify that the interest rates of the Loan do not fall within those considered usury.