As is well known, being solvent is an essential requirement to take out a loan through a bank or other type of financial entity. Naturally, the lender wants to make sure that he will get the money back and that will charge the relevant interestTherefore, it requires the applicant to have a stable job, earn enough income to pay the fees and not be in excessive debt.
Meeting this requirement, however, not always enough to get approval. And it is that not a few entities, especially conventional and financial banks that work for vehicle dealers, require the customer to take out life or payment protection insurance that ensures payment of the credit in the event of death, accident or unemployment. In most cases, they also ask that this policy be signed through their mediation.
The question, therefore, is obligatory: a financial can require a loan applicant to take out insurance? And can the client sign that policy with the company he wants or must he do it through the mediation of the entity? According to the HelpMyCash.com banking comparator, The requirement to contract insurance is legal, but not to sign it with the financial company itself.
Financial insurance cannot be mandatory
According to article 136.2.f of Royal Decree-Law 3/2020, “activities are prohibited for insurance brokers […] directly or indirectly impose the conclusion of an insurance contract”. That is to say, that the commercial manager of a financial entity You cannot require a customer to take out a policy life insurance or payment protection with the entity itself in exchange for approving your loan application.
Now the entity Yes, it can refuse to grant a loan if the applicant does not take out life insurance or payment protection, either through your mediation or with any other insurer. Likewise, it has the right to offer a credit interest reduction if, in exchange, the client subscribes these policies with the financial institution itself and other products or services such as Payroll or use a credit card.
Should I secure a loan?
The client, therefore, can consider that yes you should take out that insurance, because that way you will have a better chance of getting the loan. And if you sign it through the mediation of the entity, you can even lower the interest applied for pay a more affordable rate. But is it really worth it to insure a loan in the event of death, an accident or a potential unemployment situation?
According to HelpMyCash, keep in mind that insurance is not free: you have to pay a premium, either monthly or annually or at the time of signing the loan, the price of which can be considerable. Therefore, if a financier offers to lower interest in exchange for signing a policy, it is advisable to do numbers to calculate whether the total cost of credit will be lower in the long run.
The customer must also Assess if you really need the coverage of the policy What does the bank ask for? For example, if the applicant is a young person without heirs who intends to pay off his debt in a few years, taking out life insurance may be unnecessary, since in the unlikely event of your death, no one would inherit your debt. And if he is a career civil servant, he has little sense link credit to payment protection insurancebecause the risk of losing your job is practically nil.
Financial ‘online’ do not usually ask for insurance
Another point to keep in mind is that there are entities that offer uninsured loans that can be cheapers than those that grant those that do require contracting these policies. In this sense, HelpMyCash analysts affirm that the online financiers do not usually ask for that these additional products (or others) are subscribed and, in many cases, more competitive interest rates apply.
Two good examples are the Openbank and Cofidis loans. The Personal Loan of the first entity has an interest from 4.95% TIN (5.06% TAE) that can be obtained no need to take out insurance. And the Personal Loan of the second, available only to Cofidis clients, has interest from 5.25% TIN (5.38% TAE) that can also be be obtained without taking out insurance or other additional products.
For all this, from the comparator they advise compare loans from various entities, both those that require taking out insurance together with the credit and those that do not. In this way, the applicant will be able to compare the prices of the different proposals and you can opt for the financial company that charges you less both monthly and in total.