How loans on assignment of the fifth work
Government Agency loans for the transfer of the fifth are a formula of access to credit, granted at a subsidized rate, aimed at employees of public administrations, state and para-public bodies. Government Agency pensioners can also enjoy this opportunity.
The applicant is not called to present any motivation or details regarding the purpose of the loan, and the timing of disbursements is usually very limited.
Who can qualify for loans
The applicant must be aged between 18 and 65 and hold regular Italian citizenship. It is preferable to have a permanent contract, but this is not an essential requirement.
The refund of payment
If you have a fixed-term contract, the overall duration of the installments must not exceed the time limit determined by the conclusion of the work contract. The repayment process cannot exceed 120 months.
The assignment of the fifth provides that the installment does not exceed one fifth of salary or pension, this means that the overall amount of the loan was dependent on the amount of the paycheck or pension. The withholding of the installment from the salary is carried out directly.
The disbursement of Government Agency loans for the transfer of the fifth takes place in two forms, a direct one, which provides for disbursement by Social Institute, an institution which has merged the Government Agency since December 2011, or by banks and financial institutions.
The loans granted by Social Institute
Now that we have analyzed the Government Agency loans, the transfer of the fifth, let’s move on to the loans at subsidized conditions granted by the former Government Agency Management of Social Institute. Loans at subsidized conditions disbursed directly by Social Institute are divided into two categories: small loans and multi-year loans. In both cases, these are loans granted through a particular Social Institute credit fund, the Unitary Management of credit and social benefits.
Only employees and pensioners belonging to the Social Institute Public Employee Management registered in the Unitary Management of credit and social benefits have access to subsidized loans.
Small loans fall into the category of personal loans and allow you to access small amounts to be repaid with an amortization plan that extends to a maximum of 48 months.
Amounts ranging from one to four average net monthly salaries or pensions received by the applicant can be obtained. The repayment plan can extend for 1, 2, 3 or 4 years and the loan is repaid in monthly installments.
In the event that the beneficiary does not have any other pay or pension deductions in progress, small double monthly loans can also be obtained. In other words, in this case it is possible to obtain a sum equal to two net average monthly payments for each year of the duration of the loan.
But let’s take an example. If a civil servant with a net salary of 1000 USD receives a small two-month two-month loan, the sum paid out will be 4000 USD.
In any case, the repayment of the loans takes place through installments charged directly to the beneficiary’s current account, which in the case of pensioners corresponds to the one on which the pension is credited. Furthermore, for the pensioner, the monthly installment cannot exceed the threshold of the fifth transferable.
Interest rate and charges
Regardless of the duration of the amortization plan and the amount granted, the following apply to the gross loan amount:
- an interest rate of 4.25%;
- an administration fee of 0.50%;
- a fee for the payment of the premium for the Social Institute Risk Fund.
The latter is defined based on the age group of the beneficiary and the duration of the repayment plan. To find out the rates set for the Social Institute Risk Fund award, you can consult the relevant table, found on the last page of the Social Institute Loan Regulations, which can be consulted directly online.
Multi-year loans are credit lines granted exclusively to meet documented expenses included in the cases envisaged by the Social Institute Loan Regulation. Loans can last 5 or 10 years and the repayment plan is in monthly installments.
As for the amount that can be financed, this varies according to the reason for which the loan is requested, as established by the Social Institute Loan Regulations. For example, if you request a loan to purchase the house, you can get up to 150 thousand USD.
As regards the rate, long-term loans provide for a Tan of 3.50%. The rate of administration costs of 0.50% as well as a premium for the Social Institute Risk Fund also apply to the gross amount of the service.
Who can get it
Only employees and public pensioners registered in the Unitary Management of credit and social benefits can obtain Government Agency loans for the sale of the long-term loan. For access to credit, it is necessary to be able to have at least four years of service length useful for retirement purposes and a minimum of four years of contributions paid to the Unitary Management.
For further information on Government Agency loans for the transfer of the fifth and on other loans at advantageous conditions granted by Social Institute, we invite you to visit this in-depth analysis dedicated to the installment calculation.