Loans for young people represent a wide range of credit instruments that banks grant to their less elderly customers, allowing them to reach personal expenses (think of covering university fees, buying a personal computer, attending a language course, and much more), on dedicated and, often, more advantageous conditions than would be the case with traditional ordinary personal financing. But how does youth finance work?
Funding for young people and loans of honor
The starting point for understanding the functioning of loans for young people is the attempt to bring them appropriately back to the range of honor loans, or loans that are granted on the basis not only (and not above all) of the creditworthiness requirements (which could also be totally absent), but above all due to the goodness of the purposes that go to support.
In other words, the funding of honor can be provided not so much for the certainty that the young person can immediately return them (it will be difficult to do so, given his frequent status as a mere student) and because of the importance of the result they intend to pursue and support ( as for example in the case of support for the costs of a master’s degree).
How honor loans are paid
The foregoing certainly does not mean that funding for young people is granted on a non-repayable basis (although there are some cases of student loans and – more generally – for young people, who do not need partial or total repayment, but it is in this case of financing on public funds). However, disbursement will take place with privileged channels, with specific and specific preliminary investigations which, as mentioned above, will not be mainly focused on the concept of creditworthiness that instead permeates the characteristics of the preliminary investigation processes for other ordinary loans.
To be able to support the greater possibilities of future repayment, the loans of honor are therefore disbursed upon presentation of appropriate documentation of expenditure (such as, for example, with the presentation of university fees) and on commitments to repay the debt contracted in a repayment program that , as we shall see, it is translated by a few years.
Another fundamental element to try to guarantee fulfillment by the young person is the presence of a guarantor. In fact, non-repayable loans are often disbursed with the presentation of a guarantor (generally, one of the parents who have income), who will undertake to pay the loan installments if the beneficiary of the surety – principal cannot fulfill with his own strength.
When to return a loan of honor for young people
Given the foregoing, it remains to be understood when loans for young people structured as loans of honor must be repaid.
Generally the honor loan provides for a “vacation” period, of two or three years (or even more), useful to the young person to complete his study project, find a job and start to repay the loan regularly, paying the capital and normally reduced interest rates. In this holiday period, interest payments are not frequently required, as the honor loan is not usually structured with financial pre-amortization. In other cases, however, it is expected that in this period the young person will pay mini installments consisting of only one subsidized interest.
At the end of the vacation period, the actual depreciation period will begin, generally with a French plan. If the debtor has difficulty in repaying the capital – since he may not yet have found a job – he may request a temporary postponement of the start of the amortization plan, if the loan contract provides for it, and if the credit institution consents.
Otherwise, it is likely that the guarantor specified above (which, as we have already seen, in most cases will be represented by the father or mother of the young) is likely to intervene to repay the loan installments for young people.
However, given that the landscape of funding for Thu rooms is vast and varied, our advice can only be to deal with specific each potentially credit report, asking the issuing bank all the information you need to be able to properly carry to your spending needs, and then return the contracted capital with greater serenity. Therefore, ask for all the clarifications you need, and the availability of a clear and transparent estimate that can satisfy any eventuality and can be a useful basis for comparison.