New born loan: the public fund to support families
The new-born loan was a form of subsidized financing for families who had a child in the year prior to the request. This kind of small loans gets benefits thanks to the guarantees provided by the State, which assumes the role of reassuring the bank about the repayment of the loan, ensuring to intervene in case of insolvency of the debtor. In this way, costs are reduced, ie the interest rate to be paid. However, a public guarantee does not mean that the capital received should not be repaid: it is not a loan. Nevertheless, in this way the State supports families with children.
Let’s see how the new born fund works
The dedicated fund was activated at the Department for family policies of CONSAP (Public Insurance Services Concessionary), a public body that is used for these activities of access and support of credit. The Fund functioned thanks to close agreements with the banks participating in the initiative: this means that to apply for a new-born loan, one needs to contact a bank that has accepted the conditions of the Fund. The list can be found on the ABI website, the Italian Banking Association.
The banks adhering to the loan for newborns agree to provide some facilities for the APR, the Global Effective Annual Rate , which also includes all ancillary expenses. In particular, the APR will be fixed and cannot exceed 50% of the TEGM, Effective Global Average Rate on personal loans. What does it mean? The TEGM is a rate calculated every 3 months by the Bank of Italy, which takes into account the average of the interest applied by the banks on a particular sector, in this case that of personal loans. The APR of the new-born loan cannot be more than half the value of the TEGM on personal loans calculated by the Bank of Italy at the time the loan is requested.
The maximum amount obtainable is 5,000 euros
but the capital can be used for any expense. The repayment period for the new-born loan may extend for a maximum of 5 years. In this way, the New Born Fund helps families pay the expenses for the newcomer and facilitates their first years of life.