All about personal loan legislation: Law n.142 / 1992

When subscribing to any personal loan it is necessary to enter into an agreement which is confirmed and concluded in the form of a contract in which the price of the movable and immovable property purchased, the amount disbursed, the amount of the installment to be repaid and the plan are indicated of amortization. The loan agreement also contains the clauses governing the relationships between the seller and buyer parties so that the two are protected throughout the duration of their loan relationship.

The personal loan contract is sanctioned and protected by the Law of 19 February 1992, n. 142 relating to consumer credit and Law 154 of 17 February 1992 which contains the main concepts indicated in the contract that will be signed at the time of acceptance of the loan. Some points have been skipped to give a clearer and simpler idea to the legislation: let’s see it together.

Loan Agreement: Law of 19 February 1992, n. 142

The Loan Contract or the Law of 19 February 1992, n. 142 – Provisions for the fulfillment of obligations deriving from Italy’s membership of the European Communities – based on the 1991 Community law – it has numerous articles among which the most important and illustrative of the subject matter of this article is the art.18 concerning consumer credit.

Loan Agreement: Article 18 Law n.142 / 1992 DEFINITION OF CONSUMER CREDIT

Art. 18. Consumer credit: implementation of Council directives 87/102 / EEC and 90/88 / EEC.

1. For the purposes of this section, a consumer credit is defined as the granting in the exercise of a commercial or professional credit activity in the form of deferred payment or loan or similar financial facilitation (financing) in favor of a natural person ( consumer) that acts, in this respect, for purposes unrelated to any entrepreneurial or professional activity performed.

Art. 18 Law n. 142/1992 EXCLUDED FROM CONSUMER CREDIT

Art. 18 Law n. 142/1992 EXCLUDED FROM CONSUMER CREDIT

2. The administration contracts referred to in articles 1559 and following of the civil code are excluded from the scope of application of this section, provided they have been previously stipulated in writing and delivered simultaneously to the consumer as a copy.

4. Furthermore, the provisions of this section DO NOT APPLY, regardless of the amount:

  • to credit concessions which are repayable in a single installment within eighteen months, with the sole possible charge of charges not calculated in the form of interest, provided that they are contractually provided for in their amount;
  • to credit concessions that are directly or indirectly without payment of interest or other charges for any reason, with the exception of reimbursement of incurred and documented out-of-pocket expenses;
  • to credit concessions that are intended for the purchase or preservation of a property right, or for the execution of restoration or improvement works, on land or on a building built or to be built;
  • to the lease agreements, provided that the express clause is provided in them that at no time the ownership of the rented property can be transferred, with or without consideration, to the lessee.

5. The provisions of this section apply, insofar as they are compatible, also to those who carry out mediation activities aimed at granting credit from the lender. In particular, in the cases in which the obtaining of the credit is necessary the intervention of the third party, the cost of such intervention must be included in the annual percentage rate, as per art. 19.

Loan Agreement: Art. 19 Law n.142 / 1992 on the ANNUAL EFFECTIVE GLOBAL RATE

Loan Agreement: Art. 19 Law n.142 / 1992 on the ANNUAL EFFECTIVE GLOBAL RATE

Article 19. Total annual percentage rate.

1. The annual percentage rate (APR) is the total cost of credit for the consumer expressed as an annual percentage of the credit granted and including the interest and charges to be incurred to use it, calculated in accordance with the mathematical formula in Annex II to Council Directive 90/88 / EEC.

2. In accordance with the guidelines contained in the directive referred to in paragraph 1, the Interministerial Committee for Credit and Savings establishes, with its own resolution, to be published in the Official Journal, the methods to be applied in the calculation of the APR, identifying in particular the elements to be computed in it.

Loan Agreement: Article 21 of Law n. 142/1992 on the CONTRACTS

Art. 21. Contracts

1. Consumer credit concession contracts must be stipulated in writing and a copy of them must be delivered simultaneously to the consumer.
2. Without prejudice to the provisions of paragraph 4, the contracts must indicate:

  • the amount and methods of financing;
  • the number, amounts and due dates of the individual installments;
  • the APR;
  • the detail of the analytical conditions according to which the APR can possibly be modified;
  • the amount and purpose of the charges that are excluded from the APR calculation. In cases where it is not possible to indicate exactly such charges, a realistic estimate must be provided. Besides them, nothing is owed by the consumer;
  • any guarantees required;
  • any insurance coverage required, with the exception of those stipulated in favor of the lender, intended to guarantee repayment of the credit in the event of death, disability or infirmity of the consumer, which must be included in the calculation of the APR.

FOR SUMMARY: TABLE Art. 21 L. n. 142/1992 on the CONTRACTS

PERSONAL LOAN CONTRACT CONTENT OF THE CONTRACT DETAILS OF THE CONTRACT
SUBSCRIPTION
  • DELIVERED CAPITAL;
  • REFUND METHOD;
  • INSTALLMENT AMOUNT;
  • NUMBER OF INSTALLATIONS;
  • RATE DEADLINE.
  • APR AND DETAIL OF TAEG CONDITIONS;
  • CAUSAL OF CHARGES;
  • GUARANTEES REQUIRED;
  • INSURANCE PREMIUM.

Loan Agreement: Article 21 of Law n. 142/1992 on the CONTRACTS

Loan Agreement: Article 21 of Law n. 142/1992 on the CONTRACTS

3. In addition to what is indicated in paragraph 2, consumer credit agreements concerning the purchase of certain goods or services must contain, under penalty of nullity, the following indications:

  • the analytical description of the goods or services forming the subject of the contract;
  • the purchase price in cash;
  • the price established by the contract;
  • the amount of any down payment;
  • the conditions for the transfer of the property right to the consumer, in cases where it is not immediate.

FOR SUMMARY: TABLE Art. 21 L. n. 142/1992 on the CONTRACTS

PERSONAL LOAN CONTRACT CONTENT OF THE CONTRACT IN THE DETAIL OF THE CONDITIONS
DETAILED POINTS
  • analytical description of the goods or services forming the subject of the contract;
  • the purchase price in cash;
  • the price established by the contract;
  • amount of the advance;
  • conditions for the transfer of the property right to the consumer.

Loan Agreement: Article 21 of Law n. 142/1992 on the CONTRACTS

4. The art. 1525 of the civil code also applies to all consumer credit agreements against which a real right of guarantee has been granted on the good purchased with the money received on loan.

5. Temporarily and until the adoption of a national regulation on the transparency of banking and financial operations and services with content at least equivalent to that established by this paragraph and by paragraphs 6 and 7, for the purposes of consumer protection, contracts with which a credit institution or a finance company grant a consumer a credit account opening not connected to the use of a credit card must at least contain, under penalty of nullity, the following indications:

  • the ceiling and the possible expiry of the credit ;
  • the annual interest rate and the detailed analysis of the charges applicable from the time of the conclusion of the contract, as well as the conditions that can determine the change during the execution of the contract. Besides them, nothing is owed by the consumer;
  • the terms of withdrawal from the contract.

FOR SUMMARY: Art. 21 L. n. 142/1992 on CONTRACTS WITH CURRENT ACCOUNT

FOR SUMMARY: Art. 21 L. n. 142/1992 on CONTRACTS WITH CURRENT ACCOUNT

PERSONAL LOAN CONTRACT CURRENT ACCOUNT OBLIGATION CONTENT OF THE CONTRACT
SUBSCRIPTION OPENING OF THE CURRENT ACCOUNT FOR DELIVERY OF THE CAPITAL
  • MAXIMUM AND DEADLINE OF THE LOAN;
  • ANNUAL INTEREST RATE;
  • CHARGES OF INTEREST;
  • TERMS OF WITHDRAWAL FROM THE CONTRACT.

Loan Agreement: Article 21 of Law n. 142/1992 on WITHDRAWAL FROM THE LOAN CONTRACT

6. The annual interest rate and the charges provided for in the contracts can be changed in a way that is unfavorable to the consumer, as long as it is given to the same written communication at the last notified domicile, at least five working days before the date of application of the variations. Otherwise, these are ineffective.

7. Within fifteen days from receipt of the communication referred to in paragraph 6, the consumer has the right to withdraw from the contract without penalty and to obtain, in the liquidation of the relationship, the application of the previously existing conditions.

8. No sum may be charged to the consumer or requested by him, except on the basis of express contractual provisions. The clauses referring to the uses are void and are considered as not affixed.

9. In the event of the absence or invalidity of the contractual clauses, these latter are replaced by right according to the following criteria:

  • the APR is the minimum nominal rate of annual treasury bills or other similar securities indicated by the Minister of the Treasury, issued in the twelve months preceding the conclusion of the consumer credit agreement;
  • the credit is due in thirty months ;
  • no guarantee and insurance coverage is established in favor of the lender;
  • the faculty of early fulfillment or termination of the contract rests solely with the consumer, who can exercise them at any time, without charges and penalties.

Loan Contract: Art. 22 Law n.142 / 1992 on the FINANCIAL RESPONSIBILITY

Loan Contract: Art. 22 Law n.142 / 1992 on the FINANCIAL RESPONSIBILITY

Art. 22. Subsidiary responsibility of the financier.

1. In the event of non-fulfillment by the supplier of goods and services, the consumer who has uselessly carried out the default notice has the right to take action against the lender within the limits of the credit granted, on condition that there is an agreement that gives the lender the exclusivity for granting credit to the customers of the supplier.

2. The liability referred to in this article also extends to the third party to whom the lender has transferred, pursuant to art. 21, paragraph 11, the rights deriving from the credit concession contract.

Loan Agreement – Law of 17 February 1992, n. 154 – “Rules for the transparency of banking and financial operations and services”

Loan Agreement - Law of 17 February 1992, n. 154 - "Rules for the transparency of banking and financial operations and services"

Art. 1 – Subjective scope of application

1. The provisions of the present law are applied to credit institutions operating in the territory of the State and to any other person who, in the same territory, professionally exercises loan and financing activities or, in any case, one or more of the activities indicated in the items 2,3,4,5,, 7,11 and 14 of the list attached to the Council directive no. 89/646 / EEC of 15 December 1989.

Art. 2 – Advertising ( AT THE BANK INSTITUTIONS )

1. The institutions and subjects referred to in art. 1 must make public in each room open to the public:

  • the interest rates actually charged for the credit and collection transactions indicated in the list attached to this law and for any that, although having the nature and the requirements of the aforementioned transactions, are otherwise configured differently by the bodies and subjects referred to in ‘art. 1 deliberately for evasive purposes;
  • the maximum rate for active transactions and the minimum rate for liabilities, possibly broken down by technical form, duration and amount classes, as well as for active transactions, the amount for default interest must be indicated; for the issuance of securities, the actual yield as well as the predetermined parameters on the basis of which this yield may eventually vary should be indicated;
  • the other conditions applied for credit and collection operations, including the currencies applied for the allocation of interest to debit and credit of customers;
  • the price and other conditions applied for the services indicated in the list attached to this law;
  • the amount of the costs for communications to customers.

[…]

Loan Agreement – Law of 17 February 1992, n. 154: ART. 3

Loan Agreement - Law of 17 February 1992, n. 154: ART. 3

Art. 3 – Form of contracts

1. Contracts relating to operations and services must be drawn up in writing and a copy of them must be delivered to customers.

2. The written form is not mandatory for contracts concerning the provision of services which are the subject of the advertising referred to in Article 2, provided that their unit price does not exceed the maximum amount established by decree of the Minister of the Treasury and in any case, in the first application, 50,000 lire.

3. On the basis of a CICR resolution, the Bank of Italy may dictate, for justified technical reasons, specific procedures for the form of contracts relating to certain categories of transactions and services.

Loan Agreement – Law of 17 February 1992, n. 154: ART. 4

Loan Agreement - Law of 17 February 1992, n. 154: ART. 4

Art. 4 – Content of the contracts (SEE THE TABLES ABOVE)

1. The contracts must indicate the interest rate and any other price and condition applied, including, for credit agreements, any higher charges in the event of default.

2. The possibility of varying the interest rate and any other price and condition favorably to the customer must be expressly indicated in the contract with the clause approved specifically by the customer.

3. The contractual clauses referring to the uses are void and are considered as not affixed.

4. The clauses providing for the most unfavorable rates, prices and conditions for customers of those made public are void.

Loan Agreement – Law of 17 February 1992, n. 154: ART. 5

Loan Agreement - Law of 17 February 1992, n. 154: ART. 5

Art. 5 – Integration of contracts

1. In the hypothesis of nullity referred to in Article 4, paragraph 4, as well as in cases of lack of specific indications, the following apply:

  • the minimum nominal rate and the maximum rate of annual Treasury bills or other similar securities indicated by the Minister of the Treasury, issued in the twelve months prior to the conclusion of the contract, respectively for active and passive transactions;
  • the other prices and conditions made public during the term of the relationship for the corresponding categories of operations and services, in the absence of advertising is void.

Loan Agreement – Law of 17 February 1992, n. 154: ART. 6

Art. 6 – Modification of the contractual conditions (SEE ABOVE IN THE SECTION ON HOW TO WITHDRAW FROM THE CONTRACT)

1. The interest rates, prices and other conditions set forth in the duration contracts may be changed in a way that is unfavorable to the customer, as long as this is given in writing at the last notified domicile.

2. In the hypotheses in which general changes in the structure of the rates are carried out, the communication referred to in paragraph 1 may take place in an impersonal manner through the insertion of specific notices in the Official Gazette.

3. Upon approval by the ICRC, the Bank of Italy may provide for different methods of communication for variations concerning certain categories of transactions and services where this is justified by justified technical reasons.

4. The contractual changes for which the provisions of this article have not been observed are ineffective.

5. Within fifteen days from receipt of the written communication the customer has the right to withdraw from the contract without penalty and to obtain the application of the previously existing conditions during the liquidation of the relationship. Where impersonal forms of communication are permitted, the aforementioned term starts from the publication of the relative notices.

LOAN CONTRACT CONTRACT VARIATIONS RIGHT OF WITHDRAWAL

VARIATION ON:

  • INTEREST RATE;
  • PRICES;
  • TERMS OF DURATION OF THE CONTRACT.
COMMUNICATION BY ENTERING NOTICE ON OFFICIAL JOURNAL
  • WITHOUT PENALTY;
  • OBTAINING THE CLEARANCE OF THE REPORT.

Loan Agreement – Law of 17 February 1992, n. 154: ART. 7

Loan Agreement - Law of 17 February 1992, n. 154: ART. 7

Art. 7 – Validity of the currencies

1. For passive operations the interest on payments to a credit institution of money, bank drafts issued by the same credit institution and bank checks drawn on the same counter at which the payment is made must be counted with the currency of the day on which the payment is made and are due up to that of the withdrawal.

GOVERNMENT LOAN CONTRACT INTERESTS ON PAYMENTS CALCULATION ENJOYED INTERESTS

PASSIVE OPERATIONS:

  • CASHIERS CHECKS;
  • BANK CHECKS.
CURRENCY OF THE DAY WHEN PAYMENT WAS MADE INTERESTS DUE TO THE DAY OF THE PRELEVATION

Loan Agreement – Law of 17 February 1992, n. 154: ART. 9

Loan Agreement - Law of 17 February 1992, n. 154: ART. 9

Art. 9 – Sanctions

1. The entrepreneurs, the administrators, the directors, the employees, the curators, the liquidators and the commissioners who do not comply with the provisions on advertising referred to in Article 2 are punished with a fine ranging from two million to ten pounds millions. The bodies and subjects referred to in Article 1 are jointly and severally liable and are obliged to exercise the right of recourse with the persons responsible. The provisions of the articles are observed. 89 and 90 of Royal Decree Law 12 March 1936 n. 375, converted, with modifications, by the law 7 March 1938 n. 141 and subsequent amendments and additions.

2. In the event of repeated violations, the ICRC, upon proposal by the Bank of Italy, may order the suspension of the activities of offices and branches.

3. Within the term of thirty days the full text of the provision of the Minister of the Treasury pursuant to article 90 of the aforementioned Law Decree n. 375 of 1936, converted, with modifications, by the aforementioned Law n. 141 of 1938, is also published, at the expense of the institution or offender, in at least two newspapers, of which one is economic with national circulation. In the event of non-compliance, the publication is ordered by the Bank of Italy and the offender applies, for this reason alone, with the procedure referred to in paragraph 1, the pecuniary penalty of 5,000,000 lire in addition to the reimbursement of the costs for publication.

4. The provisions of articles 16 and 26 of Law no. 689.

5. In order to verify compliance with the provisions of this Law, the Bank of Italy may acquire information and carry out inspections of the subjects referred to in Article 1, or request that these checks be carried out by the competent control authorities or supervision.

Loan Agreement – Law of 17 February 1992, n. 154: ART. 10

Loan Agreement - Law of 17 February 1992, n. 154: ART. 10

Art. 10 – Guaranty

1. Article 1938 of the Civil Code is replaced by the following: “Art. 1938 (Guaranty for conditional future obligations). The guaranty may also be provided for a conditional or future obligation with the provision, in the latter case, of the ‘maximum guaranteed amount “.

2. The following paragraph is added to Article 1956 of the Civil Code: “The prior waiver of the guarantor to avail himself of the release is not valid”.

PERSONAL LOAN CONTRACT GUARANTEE ART. 1938 CIVIL CODE GUARANTEE ART. 1956 CIVIL CODE
GUARANTEES PROVIDED FOR A CONVENTIONAL OR FUTURE BOND WITH A GUARANTEED MAXIMUM FINANCED AMOUNT GUARANTEED PREVENTIVE DISCLAIMER TO THE INVALID FIDEIUSSION