The transfer of the fifth is a loan formula reserved for employees and retirees. It allows you to obtain personal financing with a direct withholding from your salary or pension, managed by the employer or the social security institution. In this guide we see what the sale of the fifth is, how it works, who can request it and what are the latest news for 2024
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What is the Cession of the Fifth
The transfer of the fifth is a personal loan reserved for employees, public or private, and for retirees. It is so called because the amount of the installment cannot exceed one fifth (20%) of the salary or net monthly pension
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This form of financing is characterized by the fact that the repayment of installments is not directly borne by the beneficiary, but takes place through automatic deductions made by the employer or the social security institution.
Initially introduced for civil servants, the transfer of the fifth was extended to all employees and retirees with the Financial Law of 2005.
How Does the Transfer of the Fifth Work
The transfer of the fifth involves the signing of a contract with a bank or financial institution, which establishes the amount, term and interest rate of the loan. The duration of the loan can vary from 24 to 120 months and involves repayment in constant installments, with a fixed rate
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The installments are withheld directly from the salary or pension and paid to the lender by the employer or the social security institution. There is no need to specify how the money will be used: the loan can be requested for personal expenses or for cash
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Requirements for Obtaining the Transfer of the Fifth
The main requirements to access the sale of the fifth are:
- Employees:
- Indefinite contract;
- Residence in Italy;
- Age between 18 and 63 years old;
- The company you work for must meet certain requirements, such as financial strength and a minimum number of employees.
- Retired people:
- INPS, former INPDAP retirees or other social security institutions that issue the transferable share certificate;
- Maximum age of 85-90 years at the end of the loan;
- Minimum pension net of the transferable share (does not apply to social benefits or joint pensions).
Compulsory Insurance
The transfer of the fifth provides compulsory insurance to protect the lender in the event of the debtor’s death or loss of work. Insurance is included in the loan costs and covers the risk of insolvency
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Advantages of the Cession of the Fifth
- Easy access: It is a loan secured by salary or pension, so it does not require additional guarantees.
- Competitive rates: It often offers lower interest rates than other personal loans.
- Fixed installment and automatic withholding: Payment takes place automatically, reducing the risk of non-payment.
- Without specific purpose: The loan can be requested without having to justify the use of the money.
Disadvantages of the Cession of the Fifth
- Compulsory insurance coverage: The required insurance represents an additional cost that is reflected in the APR.
- Reserved for employees and retirees: Not everyone can access this loan formula, as self-employed workers and those with fixed-term contracts are excluded.
- TFR constraint: Employees cannot request advances on severance pay (TFR) during the loan repayment period.
How to Request the Transfer of the Fifth
To request the transfer of the fifth, you must submit an application to a bank or financial institution. Required documents include:
- For employees: Last paycheck, salary certificate and data relating to accrued severance pay.
- For retirees: Retirement slip and transferable share certificate.
After approval, the employer or social security institution will be informed of the withholding that they will have to make each month for the duration of the loan.
Interest Rates for 2024
The interest rates for the transfer of the fifth vary according to the age and the amount of the loan. For the period October 1, 2024 – December 31, 2024, the Ministry of Economy and Finance has set the average rates charged by banks and financial intermediaries
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Right of Withdrawal
It is possible to withdraw from the contract of transfer of the fifth within 14 days of signing, returning the amount received and paying only the interest accrued up to the moment of withdrawal.
The sale of the fifth is a convenient financial solution for employees and retirees who want a secure and easily accessible loan. However, it is crucial to carefully evaluate the additional costs and requirements before proceeding with the request.