Loans, as the name suggests, allow loans to be obtained through the payment of bills and are especially advantageous for those who have a past as bad payers (because they have not been able to pay the installments of a previous loan, according to the fixed monthly deadlines ). In fact, the loans issued do not require the provider to control the customer’s previous debt situation.
Bills of exchange: advantages and disadvantages
The bills are credit notes useful to the lending bank to obtain a rapid satisfaction of the charges on the loan in the event that the applicant does not repay the debt within the established time. Through the enforceability of the title, the bank can rely on the assets of the bad payer and immediately start the expropriation procedures. In practical terms the bank, in the event that payment of the installment is not honored, may bring the title to a notary and attack one or more assets of the defaulting customer.
All these advantages concern the creditors but there are also considerable advantages for the debtors. As already mentioned, thanks to this instrument, loans can be granted to bad payers. The important thing for the debtor is that he is not protested and that the sums requested can be easily accessed. Another advantage for the debtor is the ease of renewal or return. In the hypothesis of temporary economic hardship, the bills can be renewed or increased in the number. The granting of the loan loan follows different paths from the traditional financing procedures, therefore, even those who do not have a job, availing of the presence of a guarantor, will have the opportunity to access the amount of money they need.
However, for this type of loan there are also disadvantages to which attention must be paid. We reiterate that the non-payment of a bill of exchange can allow the bank to immediately refer back to the debtors’ assets, with consequent registration in the register of protests that will prevent, in fact, any further form of starting a loan.
Another aspect to consider is the costs to be incurred. In particular, the preliminary investigation costs are higher than the more traditional forms of financing. Moreover, this loan includes the request for ancillary guarantees. The bill of exchange is not the only guarantee necessary, the presence of a guarantor or a life insurance policy or of liens, are often expensive expenses.
In conclusion, the loan is a useful and quick way to obtain financing in particular conditions of economic hardship of the applicant. The advantages of quick access to financing, avoiding the classic and lengthy preliminary assessments, appear to be an important factor. On the contrary, attention must be paid to higher costs, bearing in mind that banks have a strong tool to recover any outstanding debt.
The greater flexibility and ease of access to the loan is offset by higher costs and numerous contractual guarantees required. We remind you that this type of loan should be ‘the last resort’, ie to be requested only in case of extreme necessity and for amounts that are not of a high nature.
The final recommendation, as for all types of loans, always consists in carefully reading all the conditions agreed in the contract. Analyzing everything calmly can always help to eliminate any future problems that may have escaped when reading the contractual clauses. The time spent on preliminary reading is the most important investment to understand all the advantages and disadvantages contained in all types of contracts. We always remember that there are no perfect contracts or agreements, but they are always the result of agreements between the contractual parties.