Loan bullet: what it is and how it works

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In the wide range of products offered by the credit market there is a type of financing that is specifically characterized for those who need an immediate liquidity of money to use: it is the bullet loan, which more and more credit institutions and financing companies offer to their customers. This particular method of financing allows a good level of customization of the economic conditions, but on the other hand it involves an outlay of a certain importance: in fact, the structure of the bullet financing envisages that the beneficiary only pays interest installments, but at the end of the amortization plan, which is generally short or at most medium term, or even earlier if expressly provided for in the contract, must repay the full amount granted as a loan. We see more in detail how the bullet loan works, which is obviously aimed at a very specific segment of potential applicants.

Type of applicants

Type of applicants

Who can be interested in a loan of this type that involves a disbursement, however not insignificant? Being a type of loan or unsecured loan, ie a type of credit that does not provide any type of collateral or surety, obviously it can only be requested by particular categories of subjects, generally represented by companies and companies, but in this case also some professional categories, which see in the respective social security funds the lender, as a liquidation advance. Regardless of the type of applicants, the repayment method remains unchanged, while the minimum financeable sums, interest rates and related ancillary costs change considerably, as well as the required guarantees, there can be wide disparity of treatment depending on the type of financial institution you are dealing with, an aspect that is further complicated by the contractual force of the applicant with respect to the reference bank.

How the bullet loan works

How the bullet loan works

Already the word bullet, or bullet, suggests a certain speed and a considerable impact, which in a metaphor translates into a relatively short period of time for financing with a more or less considerable outlay of money according to need. Obviously much depends also on the motivations that push for the request of instant liquidity, as in the case of the social security funds that contemplate this credit possibility, and for which it is generally not very high maximum amounts: in this specific case we are much closer to a more typical example of a salary assignment that would not otherwise be available as a solution for the professional category concerned, such as for notaries or lawyers. On the other hand, with regards to the duration of the loan, generally it goes over a short period established on average in 12 months, but there are also cases of longer depreciation, up to a maximum that does not exceed 8 years. Regarding the interest rate applied, you can choose either fixed or variable, although it often depends on the amount requested, and consequently opting for variable or stable installments for the entire duration of the repayment.

Examples of bullet funding

Examples of bullet funding

We close our brief overview of bullet financing by citing some examples of credit institutions that offer their clients this option, with related conditions: let’s start with the Unicredit loan, which offers this type of loan for a maximum duration of 12 months also accessible to companies that find themselves in particular difficulties, for example those affected by natural disasters, or non-profit associations, both with fixed and variable rates, and negotiable economic conditions. Yobank, on the other hand, provides for a maximum duration of 18 months, both fixed and variable, giving preference to those who must support investments in an ecological key, to reduce environmental impact or improve energy efficiency. Finally, we close with the offer of Mps, which grants up to 300 thousand euros which can be financed both at a fixed rate and a variable rate, but with a maximum duration of just 4 months.

 


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