When you need liquidity to cover a major expense — such as renovating your home, buying a car, or consolidating other debts — the two most common solutions are: the personal loan and the assignment of one-fifth of your salary or pension.
Both allow you to obtain money quickly, but with different characteristics, guarantees, and recipients.
In this guide from MutuoFirenze.it we will clearly see what the main differences are, the advantages, and when it is better to choose one option over the other.
What is a personal loan
The personal loan is a form of non-earmarked credit, meaning it is not necessarily tied to a specific expense.
The amount is paid directly to the applicant, who can use it freely, and is then repaid through fixed monthly installments, generally from 12 to 120 months.
Main features:
It is aimed at employees, self-employed workers, and retirees;
No reason for use is required;
The bank or finance company assesses creditworthiness (income, reliability, any other debts);
A guarantor’s signature or the subscription of optional insurance may be required.
Advantages: greater freedom of use and fast disbursement times.
Disadvantages: generally higher rates compared to the assignment of one-fifth and fewer guarantees for those reported in CRIF.
What is the Assignment of One-Fifth
The Assignment of One-Fifth is a form of financing reserved for public employees, private employees, and retirees, in which the installment is deducted directly from the salary or pension.
By law, the monthly installment cannot exceed one-fifth (20%) of net income.
Main features:
The installment is fixed for the entire duration of the contract;
The bank or finance company is protected by a mandatory insurance policy (against life risk and job loss);
No guarantor is needed;
It is accessible even to those who have had credit problems or reports.
Advantages: sustainable and secure installment, lower rates compared to many personal loans, accessibility even in delicate credit situations.
Disadvantages: longer duration constraint (up to 10 years) and reduced flexibility in debt management.
Personal Loan or Assignment of One-Fifth: which to choose?
| Characteristic | Personal loan | Assignment of One-Fifth |
|---|---|---|
| Recipients | Everyone (workers and retirees) | Employees and retirees |
| Required guarantees | Income and, sometimes, guarantor | Automatic deduction from salary/pension |
| Maximum amount | Based on income and creditworthiness | Based on one-fifth of salary/pension |
| Average duration | 1–10 years | 2–10 years |
| Interest rate | Generally higher | More stable and advantageous |
| Flexibility | High | Lower |
| Accessibility for bad payers | Limited | Possible |
When is the Assignment of One-Fifth convenient?
The assignment of one-fifth is often the ideal choice for:
Those who have a stable paycheck or pension;
Those who want a fixed and secure installment over time;
Those who have had credit difficulties in the past and cannot easily access other loans.
When is the Personal Loan convenient?
The personal loan is more suitable for those who:
Want greater freedom in the use of money;
Have a stable income but are not employees or retirees;
Want medium-small amounts to be repaid in a short time.
