Getting A Loan In Italy As A Foreigner

The three most common reasons for Italians to take out loans are to buy a car, a house or an apartment or to refinance previous debt. This article will assist you in understanding your chances of receiving a loan, the many sorts of loans available, and the best ways to apply for a loan if you need one while living in Italy.

Can Foreigners Get A Loan In Italy?

It is possible to receive a loan even if you are not an Italian citizen. In the case of employees, including foreigners, there are chances to obtain personal loans or loans backed by salaries. It suffices to meet some minimal requirements—those set down by law—for the many financial institutions that provide this opportunity. If you are a foreign worker—EU or non-EU—you must also have a residency in Italy and, if you are from outside the EU, a regular residence permit.

The most important criterion for getting a loan is showing that you are regularly employed. Non-EU nationals must demonstrate that they have had a permanent contract for at least six months. Foreign employees can benefit from loans whose repayment is based on salary-backed lending formulae if they have a consistent and steady job. Alternatively, you might turn to proxy loans, debt modifications, or personal loans.

Many financial institutions are considering specialised financing options for immigrants. You need a secure job contract to get these loans because, following the initial checks, they are often issued swiftly, and the salary serves as the guarantee. You may be eligible for ministerial funds that offer discounted loans for deserving students in need if you are a resident of Italy but are a foreign citizen and enrolled in a university or post-graduate school.

Types Of Loans In Italy

In Italy, there are many different kinds of loans. For private usage, they are the most often used.

Instalment loan: The most typical loan kind has predetermined monthly payments for repayment. This is an unsecured loan with no restrictions on repayment and no assets to secure the obligation. As a result, just your creditworthiness is used to determine the loan.

Car loan: Similar to the previous loan, this fixed payment loan is just for purchasing a car. Because the car is seen as an asset supporting the debt, it is a secured loan with a reduced interest rate.

Instant loans are short-term, unsecured loans that are disbursed to you promptly. The credit volume is often lesser than an instalment loan, and interest rates may be higher.

Mortgage: a secured loan used solely to finance the purchase, construction, or renovation of a home or apartment.

Overdraft credit: Normally, this is included in checking accounts without prior application. The majority of institutions establish an overdraft cap with a defined interest rate.

Debt conversion: With this loan, you can refinance several smaller loans into one larger one at potentially reduced interest rates.

How To Get A Loan In Italy?

Before disclosing themselves and approving a loan, the lending company or financial intermediary verifies that the applicant satisfies a few prerequisites that, at the very least on paper, ensure the loan can be returned in full within the specified period.
Depending on the type of loan, different conditions must be met, and each bank has its own rules to keep insolvencies to a minimum. Three fundamental ones, nonetheless, must always be adhered to:

• the applicant’s age must be at least 18 and no older than 70, while certain banks and financial organisations may offer loans to those over 70
• a source of proven income
• having a bank account.

Car loan

When applying for a loan to buy a car, it is wise to make sure you meet all necessary conditions so that your application will be approved by the bank, financing company, or, in the event of a finished loan, the dealer of the new or used automobile.
This crucial phase in the evaluation process establishes a subject’s capacity for borrowing money and repaying it. The requirements for a car loan are generally the same as any loan.

Even though more banks and financial institutions are accepting temporary positions and other jobs with a steady income, having a permanent job is still the best way to ensure that your loan application will be approved because it will ensure that you can afford to repay the loan in monthly instalments.
Seniority pensioners’ conditions are also acknowledged, independently of the organisation that provides their pension.

How creditworthiness is measured

The choice of the credit institution will be based on the potential client’s creditworthiness and, consequently, on his capacity to pay back the loan within the parameters outlined in the loan agreement.
A subject is trustworthy if in the past, he has never had issues paying back payments on prior loans and if his financial status permits him to repay the loan. His credit history is essentially recorded in the CRIF records; the Risks Center is the first place the bank or financial institution consults before making any decisions.

The person who has previously experienced issues with instalment payments is listed as a slow payer. Similar to the above, if a loan application has previously been denied, the Central Credit Register will record this denial for a specific time.
In conclusion, several factors affect an applicant’s credit profile:

• the age
• the working condition
• the presentation of any other loans in progress
• reconstruction of credit history.

Based on the information gathered, the bank or financial institution generates a “credit score,” which is a score that evaluates a subject’s creditworthiness and ultimately determines the interest rate charged and the total amount of credit extended.
Although there is no set regulation about the minimum income level required to obtain a loan, typically, the payment should never exceed roughly one-third of the income. If it did, it would be risky to fall into debt and pay for regular costs and unforeseen circumstances.

Instant Loans

Most instant loans are financial ones obtained through online processes, which are far quicker than counter requests and enable the money to be released within 48 hours of the application.
Simply create a quotation, send the request to the preferred financial institution and follow the straightforward guided approach to get a quick online loan. Before proceeding, make sure to read all of the loan’s terms and conditions thoroughly. To send the request, you must complete a brief form with your personal information, other details, net monthly income, outstanding debts (including your mortgage), and the payment amount.

The paperwork needed to apply for a fast loan and submit it to the lender is standard for all loan applications:

• Fiscal and economic documentation, depending on the applicant’s employment situation (pay slip, slip, single model, etc.)
• identity card
• tax code.

The financial responsibility is given relatively quickly if the supporting documentation is reasonably free of mistakes or discrepancies. The lender is always free to do all required checks before approving the loan, and if necessary, it may call the applicant to allay any potential concerns and complete the process.

The application for fast loans has certain limits compared to the usual process. However, it is still an excellent option for individuals who want a significant amount of money in a concise amount of time.
For rapid online loans, the maximum payout restriction typically runs between 5,000 and 30,000 euros. However, each bank is allowed to unilaterally set its own maximum limit. It must also be taken into account that a rapid loan’s interest rates are slightly higher than usual compared to a conventional loan.

Retirement-age people, those with variable incomes, and students can benefit significantly from quick loans since they can quickly get the money deposited into their current accounts, allowing them to deal with unforeseen occurrences and needs without depleting their savings.

 

Mortgage

It might appear complex and confusing to choose and secure a mortgage. To manage your mortgage application most efficiently and practically, it is sufficient to be aware of the various processes and their effects.

The buyer is forced to secure the funds required for the purchase of the property upon signing the compromise or promise of sale; these funds must be disposed of by the date specified for the deed of purchase ( notarial deed ). When there is a lack of liquidity, finding a bank that can match the case’s requirements while also considering the applicant’s unique qualities is crucial.

The mortgage application

All sections of the loan application must be filled out as precisely as possible after the bank has been located. Standard information is often included in the questionnaire-style mortgage application. The information that applicants must provide for the loan is:

• the loan applicant’s or applicants’ personal information;
• the residence
• the current residence, whether rented, owned, or shared with others;
• what the family unit looks like;
• dependents;
• current employment status: employed or independent;
• duration of employment or independent work;
• the working / productive sector;
• if an employee, the indication of the employer;
• the professional qualification;
• the monthly net income;
• the annual net income;
• the details of the real estate property and its fixtures, including the total size, including covered and uncovered space, the number of storeys, and the year of construction;
• the building’s worth;
• a statement stating whether it has any financial obligations, in which case the amount owed and the creditors’ names must be specified.

The documents to be presented.

All required paperwork must be sent to the bank to corroborate the information that has already been informally reported in the loan application once the feasibility opinion on the requested loan has been acquired. The Bank asks for documentation related to your work, whether self-employed or employed and by email.

Crowdfunding 

Crowdfunded loans are becoming a more popular alternative to traditional loans. With such a system, you don’t borrow money from a single bank; instead, you borrow money from several private individuals who invest in you in exchange for more excellent interest rates than they would receive if they kept their money in a savings account.

Five Tips For Getting A Good Loan in Italy

Check Your creditworthiness

Your creditworthiness significantly influences your ability to obtain a loan in Italy. Knowing your creditworthiness can help you assess your prospects and costs more accurately, and you may enhance it if required.

Choose The Correct Loan Type

In Italy, there are many loan types, as previously mentioned. Apply for a loan in that specific category since it will have lower interest rates if you qualify for a secured loan. You use it to acquire securities or collateral, such as a car or a house.

Take A Loan Together With Another Person

Applying for a loan with a partner, such as your spouse, lowers the risk for the bank or lender and lowers interest rates, so strive to do so whenever you can.

Choose The Loan Amount And Duration Realistically

Calculate the loan amount and term to ensure that you can afford the repayment rate without applying for a second loan or having a negative influence on your daily life.

Compare Different Loan Offers

It is wise to compare loans. Don’t simply accept the first offer that your bank makes. When comparing loans, always consider the annual percentage rate. 

Helpful Italian Vocabulary Related To Loans.

Richiesta di prestito – Loan request

Richiesta condizioni di prestito – Loan conditions request

Durata del prestito – Loan duration

Merito creditizio – Creditworthiness

Tasso d’interesse – Interest rate

Interessi nominali sul debito – Nominal Interest on debt

Tasso annuo di aprile – APR annual percentage rate

Rate – Installments

Conversione del debito/rifinanziamento – Debt conversion / refinancing

Conclusion

We hope this guide has provided you with practical advice on obtaining a loan in Italy, mainly if you are a foreigner. Please be cautioned that taking out a loan shouldn’t be a hasty choice. Before signing any contract, assess your financial condition and ability to repay the loan in full using the numerous loan calculators offered by businesses or banks.