In recent years, even in the Italian market, it has started to speak more insistently about loans between private individuals . Merit of the birth of some portals specialized in favoring the meeting between supply and demand in this sector, but not only. However, today we want to ask ourselves: how do loans between individuals work?
Loans between individuals, what they are
First of all, it is good to remember how in reality loans between private individuals are much more remote, over time, than what has already been formalized through the social lending platforms spread over the years. In other words, loans between private individuals have existed for much longer than loans formalized by lenders: it is sufficient to remember the habit of lending money between relatives, friends, and so on.
Loans between individuals are – equally naturally – legal, and are often expressions of free or compensated solidarity. In order to avoid incurring unwanted surprises, it is nevertheless advisable to formalize and contract the transaction: a sign of trust and transparency that will avoid going to meet bad prejudices that could ruin the relationship. But how?
Loan agreement between individuals
Assuming that loans between private individuals are legal and much more widespread than social lending platforms suggest, we point out that the formalization of a loan contract between private individuals naturally also depends on the size of the loan: a loan of a few tens of euros is not the effort to draw up a contract will probably be worth it. A loan of a few thousand euros could instead support more appropriately the possibility of resorting to a formal loan agreement, which will take the form of a private agreement, with full legal validity, within which the parties involved will be indicated, the rate of expected interest, timing and methods of return, any guarantees, and so on.
Loans between individuals with private writing
Loans between private individuals with private writing are – as we have seen above – the “basis” of the formalization of a loan between private individuals. The contract must be stipulated in two copies, with a form attributable to the provisions of art. 1813 of the Civil Code. There is no obligation of authentication by the notary, or of registration. However, it must contain some minimum validity requirements, such as:
- personal data that can allow the parties involved in the loan agreement to be uniquely identified;
- amount lent, identified in numbers and letters in order not to leave room for possible misunderstandings;
- method of repayment of the sum lent, with indication of any amortization plan;
- interest rate applied to the capital being financed (where envisaged and, therefore, if it is not an interest-free loan);
- explicit wording that this is a loan agreement;
- certain post date and handwritten signatures.
In relation to the interest rate, we remind you that the loan can be non-interest bearing (where interest is not foreseen) or interest-bearing (where instead agreed interest is applied, not higher than usury interest). The loan may also be personal (the beneficiary may use the sums disbursed at his discretion) or finalized (the recipient must use the loan for a specific purpose).
Loans between individuals with bills
Another typical form of loans between private loans-between-private is represented by the one with bills of exchange, debt securities that represent a very valid form to be able to guarantee a loan. Bills of exchange are instruments that present a series of advantages in terms of simplicity, flexibility, guarantee and convenience for both parties.
The burden linked to the use of bills is mainly linked to the presence of the revenue stamp to be applied on the back of the security, for an amount equal to 12 per thousand of the facial amount, to be rounded up.
Loans between individuals with social lending
Finally, we are allowed one last mention of social lending, one of the main levers that allowed the explosion of loans between private individuals online. The social lending service aims to ensure the meeting between the demand for loans, and the supply of liquidity by people who wish, in this way, to put their savings to good use, obtaining a higher return than similar instruments risk.
Those who lend the money will therefore establish the interest rate at which they intend to lend it, meeting the counterparty risk of default. However, the risk is split between several creditors in order to reduce potential losses. The times for obtaining the loan through social lending are generally rather limited, and are in any case appropriate on the basis of a primary assessment of the creditworthiness of the possible debtor. As can be guessed, supply and demand have no possibility of knowing the data of one or the other.