Changed loans: characteristics, strengths and weaknesses


But what are their characteristics? To try to deal with this awareness of our in- depth analysis on loans with promissory notes , let’s start with a small step backwards and take care to understand what bills are.

What is the promissory note

promissory note

The promissory note, one of the main protagonists of the promised loan, is a credit with which the parties undertake or undertake mutual services. In other words, through the promissory note we promise or order the payment of a certain amount indicated in the credit, on a future date, and in a predetermined place. It is therefore a means of credit which is used to postpone the monetary supply, and which can be issued to postpone the settlement of a service provision (for example, the sale of a product), or the extinction of a financial debt (as happens precisely in the case of exchanged loans).

In more concrete terms, on the basis of the bill of exchange, it is possible to distinguish two different types of bills:

  • the section , which is a credit to the order in which a subject (tractor) orders a second party (drawee) to pay a certain sum to a specific third party (borrower or beneficiary, possibly coinciding with the tractor);
  • the promissory note, which is a credit to the order in which a subject (issuer) promises the payment of an amount of money to a second person (borrower or beneficiary).

We also remind you that in order to be “in order” with the enforceability, a stamp duty must be applied to the bill of exchange which will allow the expropriation / executive procedure to be advanced directly, in order to obtain payment of the amount indicated in the bill of exchange.

How the changeable loans work

How the changeable loans work

Having introduced the above, it is easier to understand the characteristics of the loans changed. With the disbursement of a loan changed, in fact, the bank or the financial company will grant an amount of money, making the debtor sign a series of bills (as mentioned, mainly on a monthly basis), with the payment of which we will proceed to the gradual extinction the repayment schedule, and related debt.

Therefore, the operation involves:

  1. Request for financing by the debtor , with contextual delivery of the necessary documentation to be able to proceed with the investigation by the lending institution (pay slips, tax return, ongoing documentation of identity, eventual proof of expenditure, and so on).
  2. Analysis of creditworthiness preliminary investigation by the credit institution , and consequent positive resolution and communication to the future debtor in case of acceptance of the request.
  3. Signing of the commitment to pay bills of exchange , and preparation of debt securities with stamp duty, in the measures provided for by current law.
  4. Disbursement of the requested capital , by crediting the debtor’s current account or by money order / bank transfer.
  5. Repayment of the debt , respecting the amortization plan characterized by the payment of the bills of exchange, generally every month.

What are personal loans as collateral

personal loans as collateral

Loans promoted must not be confused with personal loans as collateral, which are personal loans, the main guarantee of which will be represented by the preparation of a series of bills of exchange which will only serve as a fixed-term disinvestment effect.

In other words, personal loans with a foreign exchange guarantee are personal loans in all respects, to which an effect is provided – by way of ancillary guarantee – which allows a faster recovery of the debt in the event of insolvency by the of the subject who should have punctually fulfilled his obligation.

What are the advantages of changed loans

What are the advantages of changed loans

There are numerous advantages that can be placed in loans exchanged by those who resort to this form of debt, even if partially disused compared to other forms of financing. Among the main ones, we can certainly remember the fact that the exchanged loans, for the guarantee they present, can also be granted to subjects who have had previous problems in terms of respecting the amortization plans of other past loans (however, it remains very difficult that a changed loan can be disbursed to protested parties).

Furthermore, it can be remembered that the loans changed are generally less onerous loans than other forms of credit (such as the transfer of the fifth), with the lending institutions that are usually more likely to grant rate discounts by virtue of the greater guarantee of repayment in case of default.

Furthermore, finalized loans can offer numerous advantages in terms of modification of the repayment program: it is in fact possible to enjoy greater flexibility in payments, with the possibility of renewing bills in the event of sudden and temporary difficulties in returning the capital, and so on.

What are the disadvantages of changed loans

What are the disadvantages of changed loans

Having said that, it is also true that the exchanged loans are not without negative points, although certainly not such as jeopardize access to this form of financing.

First of all, it is necessary to remember the presence of the “inconvenience” linked to the existence of the promissory note, a credit security that must be paid in pre-established places and times (generally, in a bank chosen by the lending credit institution). Secondly, the fact that by not paying the bill of exchange, there is a risk of going to executive action quickly, with consequent rather significant prejudices, even in the short term.

Thirdly, it should be remembered that the changed loans are rather complex loans to be requested and formalized (compared, at least, to other forms of personal loan), and that although they have less expensive conditions than other forms financing, are certainly not among the most convenient forms of technical loan in the credit world.

Finally, in addition to the above, we also remind you that the changed loans are not available in all banks and all financial institutions, and that therefore it may be difficult to try to identify the financing institution of greater proximity and reference.