The Polish financial services market is constantly growing. Exceptionally, the media banks are just the tip of the iceberg. Apart from them, loan companies constitute a large part of the market. The basic difference between the type of services they provide is the basic product. In the case of banks, it is a loan, and in the case of non-bank institutions – a loan. These concepts, contrary to appearances, are completely different from each other. How to distinguish them from each other?
With the growing financial aspirations of society and the still-widespread cases of emergency spending, financial institutions are undergoing a siege. In the case of banks, they are provided with a constant group of clients, for instance due to the housing market situation – hardly any young couple can afford to buy four angles from their own funds, which is why loans are so often taken for these purposes. Due to the strict restrictions that banking institutions envisage, many people can not afford to use their services.
In such situations, many non-bank institutions meet their needs. They constantly multiply like mushrooms after rain and cover us with advertisements of their offers. The basic products they have, of course, are loans or payday loans. Contrary to the misleading belief that has existed for years – a loan and loan are not synonyms! The interchangeable use of these concepts is misleading. It is worth knowing the differences that divide these issues.
What is the difference between a loan and a loan?
Many think that these concepts are the same. Meanwhile, nothing more wrong – a loan and credit are notions from the point of view of the law are completely different.
- The loan can be granted only by the bank and the contracts concluded while granting loans are subject to banking law – the amount of the fee (commission, interest) must always be determined and, above all, the repayment date
- A loan may be provided by anyone with an appropriate financial outlay. Up to PLN 500, you do not even need a written contract to provide the service! Above this value, the contracts are regulated by the provisions of the Civil Code, which means that the value of the loan and the date of its return are not required.
The contract, which the borrowers contain, is governed by the provisions of the Polish Civil Code. According to its provisions, when concluding a contract with a non-bank institution, the borrower is obliged to transfer to our property a certain amount of money or things marked only to the species. The taker agrees to return the same amount of money or things of the same species and the same quality. The regulations do not impose, interestingly, the parties to the form of the contract. It does not even have to be written! However, the condition is one – then it must refer to a value lower than PLN 1,000.
According to what we can read in the above cited provision of the provision, the subject of the contract may be not only money, but also things. In their case, however, their species must be specified. This means that the contract may relate to things defined by features relating to a larger group of products. We can include this group, for example gasoline or oats.
On the other hand, the object of the loan agreement can not be an item with a designated identity, i.e. specific features assigned only to it. An example here is a car with a specific registration number.
In addition, you do not need to provide proof of income and receipts from your employer to obtain a loan. It is the lender who decides what requirements the borrower should meet according to him. It may happen that, unlike a loan, a loan will be granted to a person who has no regular income or who is living on benefits.
Who can grant loans?
Knowing the differences between a loan and a loan will allow you to make better financial decisions.
Loans may be granted both by natural persons and legal persons, i.e. non-bank institutions, as well as banks. It does not matter if the natural person concludes the contract as a private person or as a representative of the company he runs. The lender does not have to specify the purpose for which he lends money. The lender, in turn, has no right to control what the money transferred to the client is intended for. On the other hand, he has the right to include this condition in the contract, but it is not mandatory.
Based on the agreement, you can find out whether the loan will be provided for a fee or free. It depends on individual issues, because it is not regulated by any regulations. The non-banking institution is therefore entitled to set a free loan offer, but it is not its duty.
The way to secure a loan agreement can be either a surety, a promissory note, a pledge, a court pledge or even voluntary submission to enforcement.
What is a loan?
Credit is what we call what results from the conclusion of a written agreement between the bank and the borrower. The first party undertakes to allocate to us the amount of money in a specific currency for the given purpose and the designated time. We, in turn, declare that the loan will be used in accordance with the declared objective. In addition – we will refund its entire amount in a specific installment system, additionally paying the bank commissions and interest determined in the loan agreement.
A loan is a classic example of a mutual obligation, which is characterized by: maneuverability, punctuality, interest rate, remuneration and purpose.
As for the loan agreement, this issue is governed by the letters of the Banking Law. According to its provisions, the loan agreement can be called a situation when the bank undertakes to give the client at the disposal for a specified period in the contract a specified amount of cash. Their purpose, or purpose, must be determined. The borrower, in turn, undertakes to use the loan under the terms clearly defined in the concluded contract. He must also return the amount of credit used, including interest and commission at specified repayment dates.
A credit agreement must necessarily be in writing. If this is not the case – unlike loans, it is invalid and oral arrangements have no meaning.
The subject of the loan agreement can only be a specific sum of money, which is precisely indicated in the document contained in the letter. In addition, the loan may only be granted by a banking institution.
The loan agreement is always payable. For providing the borrower with certain funds, the bank requires additional interest. They are repaid with loan installments. What is important, the loan also acts as a target agreement. This means that the funds received from the bank must be used for a specific purpose, which is specified in writing in the documentation. The bank has the full right to control whether the money is actually spent in accordance with the purpose.
For loans, a permanent source of income is required. To obtain a loan, you will need to provide proof of employment regardless of the bank. The minimum period after which you can apply for a loan is:
- 3 months in the case of a contract of employment
- 12 months in the case of a contract of mandate or contract for specific work. In this case it is necessary to present account statements and on the basis of this the bank calculates the average salary from the last 12 months.
- 12 months in the case of a business. Similarly as in the case of a contract of mandate or contract for specific work, the bank will calculate the average sum of revenues from the last 12 months.
Finally, let us remind you that the loan agreement is secured. In practice, a mortgage, bank guarantee, letter of credit or bills of exchange is most often used. Thanks to these requirements, credit is practically always a cheaper choice than a loan. It is true that it takes a bit more time and a direct visit to the branch is required for presenting documents and signing the contract, however, the difference can be up to several percent in the APRC.
Loan and loan – summary
In summary, as can be seen from the above-mentioned features of loans and credits, you can see how the law strictly distinguishes them from each other. Most provisions allow us to clearly distinguish both types of benefits in the assumptions. Loans belong to a group of much less formalized ones, and loans – strictly regulated by law. The first ones are usually passed on to less costly needs, and the second – on expensive projects such as buying a car or a flat. Apart from the fact that installment loans are usually more expensive than loans, many people choose the first option due to quick online decision and no formalities.
To find the loan that best suits your needs, we advise you to check our current loan ranking. The ranking is updated regularly to provide up-to-the-minute information on online loan offers.